The Issue The issues presented herein concern the standing of the Intervenors to challenge the licensure of Caruso Chrysler-Plymouth, Inc., to sell Chrysler- Plymouth automobiles in the State of Florida, particularly in Duval County, Florida. See Section 320.642, Florida Statutes. In considering the standing question, specific attention is given to the meaning of the term "real party in interest" as set forth in Rule 15C-1.08, Florida Administrative Code. 1/ WITNESSES AND EXHIBITS The following witnesses testified in the course of the proceedings: John Caruso, President, Caruso Chrysler-Plymouth, Inc.; John McLeod, Dealer Placement Specialist, Orlando, Florida, zone, Chrysler Corporation; Thomas McMenamy of G. T. Automobile Leasing; Michael Gratiano, Jr., school teacher, Sandalwood High School; Paula Bass, customer of Massey Dodge; Charles Cooper, customer of Westside Dodge and owner of Chrysler-Plymouth products and former Chrysler dealer; Robert E. Keel, used car dealer; Ralph Sarotte, Director of Marketing, Planning and Strategy, Chrysler Corporation; John Burnett, President, Massey Dodge; William Shore, President and owner of Westside Dodge; and George Hanlon, Vice President, Rebuilding Services, Inc., which owns two (2) Chrysler- Plymouth dealerships and (1) Dodge dealership. He is also President of River City Chrysler-Plymouth. Petitioners presented Exhibit 6, brochures related to Chrysler Corporation automobiles. Intervenors presented a series of exhibits; Intervenors' A is a copy of September 3, 1982, correspondence from Benry Noxtine, Dealer/License Supervisor, Division of Motor Vehicles to John E. Caruso as President of Caruso Chrysler- Plymouth, Inc.; Intervenors' 1, Chrysler Corporation brochures related to automobiles for the 1983 model year (disregard numbers which appear on the face of the brochures, in that these exhibits were taken from the materials Intervenors had Provided in responding to an interlocutory motion by Petitioners to close the Division of Administrative Hearings' file); Intervenors' 5, parts and service catalogs issued or made for Chrysler Corporation for the 1983 model year; Intervenors' 7, photographs taken of charts related to sales made by Westside Dodge, Inc., in Duval County, Florida; Intervenors' 9, statistics compiled by Chrysler Corporation referencing market penetration and dealer productivity in Jacksonville, Florida, and the zone which includes Jacksonville; Intervenors' 10 is constituted of descriptions of various groups and packages and options related to select Chrysler Corporation automobiles and is found as an attachment to the deposition of John R. McLeod, excerpts of which are part of the record of the final hearing; Intervenors 11, an advertising flyer related to select 1980 Chrysler Corporation automobiles; Intervenors' 12, photographs of some of the automobiles which were viewed, depicting offerings by Dodge and Chrysler-Plymouth; Intervenors' 13, January, 1983, NADA used car reference guide for Southeast United States, and Intervenors' 14, Black Book on used specialty vehicles and trucks for December, 1982, national. (Other exhibits were identified in the Prehearing Stipulation but were not involved in the presentation related to the standing of the Intervenors to challenge the licensure of Caruso Chrysler-Plymouth.) CASE HISTORY In August, 1982, Caruso Chrysler-Plymouth, Inc., made application for Florida Motor Vehicle Dealer licenses to sell Chrysler-Plymouth products and Imperial automobiles. This followed Chrysler Corporation's stated intent to grant franchises to Caruso to sell the aforementioned automobiles. 2/ Prior to the preparation of the application, River City Chrysler-Plymouth, Inc., which is located in Jacksonville, Florida, on Cassat Avenue, had made known its intention to protest the licensure of Caruso. Caruso would locate its facility on Southside Boulevard in Jacksonville, Florida. A copy of the application and the protest letter, together with a request that the Division of Administrative Hearings conduct a formal hearing was forwarded to the Director of the Division of Administrative Hearings on September 7, 1982. The Division of Administrative Hearings' file was then opened to consider the request of Petitioners in the face of the challenge by River City Chrysler-Plymouth. On September 17, 1982, Intervenors filed a direct petition with the Division of Administrative Hearings and a motion to intervene in the ongoing action. This request was honored by order of September 28, 1982, notwithstanding the position of Henry C. Noxtine, Dealer/License Supervisor for the Division of Motor Vehicles, as found in Intervenors' Exhibit A. In that correspondence, which was made known to the Hearing Officer subsequent to the September 28, 1982, order, Noxtine, in correspondence addressed to the President of Caruso and copied to counsel for Intervenors, states "also, letters of protest has (sic] been received by and through its counsel, for Massey Dodge, Inc., 3333 Main Street, Jacksonville, Florida, and Westside Dodge, Inc., 1672 Cassat Avenue, Jacksonville, which will not be considered." Prior to being informed of the contents of the September 3, 1982, correspondence, the Hearing Officer also attempted to ascertain the Division of motor Vehicles' Director's position on the rights of Intervenors. This occurred after September 28, 1982. No change was made as a result of this inquiry. Further treatment of standing was described in the November 16, 1982, order which has been mentioned before. The November 16, 1982, order was entered in response to a motion to close the Division of Administrative Hearings' file in view of the withdrawal from the action of the original protestant, River City Chrysler-Plymouth. It was determined that the withdrawal did not prejudice the rights of the Intervenors. In particular, the withdrawal did not bar the Intervenors' rights to seek consideration of their opposition to the licensure of Caruso Chrysler-Plymouth. The latter portion of the order identified how those claims of Intervenors would be addressed. Ultimately, a final hearing was held on January 10, 1983, leading to a ruling on the record that Intervenors did not have the requisite standing to challenge the licensure of Caruso to sell Chrysler-Plymouth automobiles in Jacksonville, Florida, as augmented by this Recommended Order.
Findings Of Fact John E. Caruso, owner of the applicant, Caruso Chrysler-Plymouth, Inc., is also the owner of Regency Dodge. The Dodge dealership sells Dodge cars and trucks and services Chrysler products at a location which is approximately one (1) mile from the location of the proposed Caruso Chrysler-Plymouth dealership. Caruso is also part owner of a Dodge, AMC and Renault car store in Green Cove Springs, Florida, Caruso Motors. John Caruso has operational responsibility for Regency Dodge and would have some managerial involvement with Caruso Chrysler- Plymouth. We is not involved in the management of Caruso Motors. Caruso motors and the other automobile dealers in Green Cove make a substantial number of automobile sales in Duval County, Florida, the county in which Regency Dodge and the proposed dealership are to be found. Both Regency and Caruso Chrysler- Plymouth would be in the immediate vicinity of the shopping center known as Regency Square and are both found on the south side of Jacksonville, Florida, also referred to as east Jacksonville. In the past, Chrysler-Plymouth sales have been made from a location which was one block away from the present location of Regency Dodge. That store has closed, and there has been no dealership in that location in the last three years. There was also a Chrysler-Plymouth dealership on Phillips Highway on the south side of Jacksonville until February, 1982, when that organization went out of business. At present, the only Chrysler-Plymouth dealership in Jacksonville, Florida, is River City Chrysler-Plymouth which is on the west side of Jacksonville, Florida, on Cassat Avenue. In 1982, of the approximately 1,000 sales of Dodge products made from Regency Dodge, 600 of those were fleet sales. Regency Dodge does warranty work on Chrysler-Plymouth automobiles as well as Dodge. Chrysler's treatment of warranty claims on all automobiles is uniform. Regency Dodge and other Dodge dealers are required to do warranty work on Dodge products and may do warranty work on Chrysler-Plymouth products at their option. Presently, there are three Dodge dealerships in Duval County, Florida, which are constituted of Regency Dodge and the two Intervenors. Ideally, Chrysler Corporation feels that the best balance would be to have two Dodge dealers and two Chrysler-Plymouth dealers in Duval County, Florida, or Jacksonville, which is essentially the same market area. This is borne out by excerpts of a document dealing with prognostication by Chrysler Corporation on the subject of automobile sales in Jacksonville, Florida, found as a part of Intervenors' Exhibit No. 9. Realization of the marketing goals of Chrysler Corporation in the Orlando, Florida, zone, of which Jacksonville is a part, is discussed in the excerpted portions of the deposition of John R. McLeod taken on January 6, 1983. This deposition is being transmitted with the Recommended Order and the excerpts are fully identified in the transcript of the hearing. As the excerpted testimony in the deposition points out, should Massey Dodge, which is located on Main Street in North Jacksonville, Florida go out of business, at that location, it is not the intention of Chrysler Corporation to open up another Dodge dealership at that location. In that same deposition, McLeod establishes that, with the exception of the Caruso arrangement, there are no Dodge and Chrysler- Plymouth dealerships owned by the same individual within the Orlando zone. McLeod identifies in his deposition that the idea of having two Chrysler- Plymouth and two Dodge dealers in Jacksonville, is premised upon information from industry registrations of automobiles and other basic factors involved in the analysis of the metropolitan market. This did not include a survey of the general public. Finally, McLeod indicated that Chrysler Corporation felt that it needed a Chrysler-Plymouth dealership on the east side of Jacksonville, which would include the Regency area, an area also referred to as southside. This led to Chrysler offering Caruso the opportunity to be Chrysler's dealer. Intervenors' Exhibit 10, which is an attachment to the McLeod deposition, demonstrates the interchangeability of parts for Plymouth Reliant and Dodge Aries; Chrysler Cordoba and Dodge Mirada, and Plymouth Turismo/Horizon and Dodge Charger/Omni. These vehicles are manufactured in the same facility. Thomas McMenamy works for a car leasing firm in Jacksonville, Florida, and indicated the similarity between Chrysler K-Cars and Dodge Sportsman and Plymouth Voyagers in his efforts to satisfy lease customers. Michael Gratiano, Jr., a local teacher in Jacksonville, Florida, is the owner of a 1981, Ram Charger, a vehicle he found to be similar to a Plymouth Trail Duster. He also owns a 1982 Dodge 400 Convertible which he purchased from Massey Dodge. Paula Bass bought a 1982 Dodge 400 from Massey Dodge and in her shopping felt that the Dodge 400 and Chrysler LeBaron were similar automobiles. Charles Coopers who was a Chrysler Corporation dealer from 1940 through 1950, owns a 1977 Chrysler New Yorker and 1980 Plymouth Volare which he has serviced at Westside Dodge at their Cassat Avenue premises. Robert E. Keel gave testimony in this hearing. Mr. Keel is a used car dealer in Jacksonville, Florida, and recalls a conversation with John E. Caruso in which Caruso indicated that he might wish to sell Chrysler-Plymouth and Dodge products in the same location, a comment which Caruso denies. Ralph Sarotte, Chrysler Director of Marketing, Planning and Strategy, gave a break-out of the similarities and dissimilarities between various offerings in the Chrysler Corporation product line. These automobiles are depicted in Intervenors' Exhibit 1 and Petitioners' Exhibit 6. These product lines have formerly been advertised by one firm, an arrangement which is now in transition, with the intention to have a second advertising firm involved, at which point Chrysler-Plymouth products would be advertised by one firm and Dodge products by a second firm. At present, there are some ads that are common to all Chrysler Corporation products, to include comments by the Chairman of the Board of Chrysler Corporation, Lee Iacocca, and advertisements related to financing and warranty matters. There is common advertising for performance Parts for Dodge and Chrysler-Plymouth automobiles. The Colt advertising is a common pursuit for Dodge and Chrysler-Plymouth. The emphasis on the future advertisements of Chrysler Corporation would be that Chrysler-Plymouth products represent value, America's way to get its money's worth and economy. The thrust of the Dodge advertising would depict Dodge as a "driving machine" represented by driving excitement and excellence. Chrysler Corporation offers subcompact cars which are depicted in Petitioners' Exhibit 6, as are all models to be discussed through this Recommended Order. The subcompact Plymouth is referred to as the Horizon and the Dodge is the Omni. There are approximately six unique parts on these automobiles which have to do with the grill, tail light assembly, and name plates, out of approximately 3,500 parts. A speciality type of automobile within the Horizon and Omni families would be the Plymouth Turismo and Dodge Charger whose principal differences have to do with the facia, tail lamps, name plates and graphics such as tape strips. Chrysler Corporation sells compact models referred to as the Dodge Aries and Plymouth Reliant which are known as K-Cars of a five or six passenger capacity in two and four door sedans and a five door wagon. The grills, tail lights and name plates of the two automobiles are the unique features. A more luxurious compact offering by Chrysler Corporation would be the Dodge 400 and Chrysler LeBaron lines which are five and six passenger automobiles. This represents Chrysler Corporation' a contribution to the "middle market" and these automobiles have facia, tail light and body side molding differences with Chrysler automobiles carrying a three to five hundred dollar ($300.00 to $500.00) increase in base unit price. In particular, Dodge offers a two door, four door and convertible version of its 400 series. Chrysler offers a two door, four door, basic convertible and Mark Cross designer series convertible, a town and country wagon and a town and country convertible. The latter three models have no Dodge counterpart. Chrysler Corporation intends to market, as a 1983 1/2 model, an automobile known as a Shelby Charger which is a unique product offered through Dodge affiliates. Its body appearance, wheels and tires and engine are distinguishing features of this automobile. In the front-wheel drive line, in the up-market automobiles, Dodge sells a 600 series to include the 600-ES. In the same market, Chrysler offers the E-Class automobile. Basically, there are differences in the appearances of these automobiles related to the front end, tail lights, name plates and fender designs. Also Dodge 600-ES has a unique transmission/engine combination offering a five speed transaxle. Moreover, it has unique exterior graphics, hood ornament and road wheels. Chrysler, in its E-Class automobiles, intends to offer a Chrysler New Yorker and Executive Sedan as 1983 1/2 models in addition to its current E-Class sedan. There are no comparable Dodge models to the New Yorker or Executive Sedan. The New Yorker has a landau roof treatment, special instrument panel and trim and name plate differences. The Executive Sedan has extended wheel base differences when compared to the Dodge line and offers greater seating capacity. The roof, doors and quarter panels and interior are also unique. Chrysler Corporation offers two cars in the mid-specialty line which are rear wheel drive cars. They are the Chrysler Cordoba and Dodge Mirada whose principal differences are the front end design, tail lights, roof adornment, wheels, tires and instruments. Chrysler Corporation offers rear wheel drive mid-price cars. The Dodge Diplomat is offered in two price classes known as the Salon and Medallion. A Plymouth Gran Fury is sold as a Salon, but not as a Medallion. A third model is the New Yorker Fifth Avenue which is unique to the Chrysler-Plymouth line. Dodge is the truck division of Chrysler Corporation. It is the intent of Chrysler Corporation to sell trucks only through its Dodge affiliates. In 1983, Chrysler-Plymouth dealers will only be able to sell 1982 Voyaoers and Arrow Pick-ups which are found at the dealers and 1983 Voyagers. In 1984, the Voyager truck line will be discontinued at Chrysler-Plymouth dealerships. Chrysler Corporation merchandises automobiles, with a utility feature which are sold as cars and known as Plymouth Scamps and Dodge Rampages. There are minimal differences in these vehicles and those differences are of the types described in its Turismo and Charger. Chrysler Corporation markets import models from Mitsubishi Motors Corporation, a Japanese manufacturer. These are two and four door automobiles whose sole differences are designations which indicate that they are imported for sale by Dodge or Plymouth. These automobiles are known as Colts, and are subcompacts. Chrysler Corporation also offers the Mitsubishi automobiles known as Sapporo and Challenger which are rear wheel drive automobiles whose differences relate to grill and tail light and interior appointments. The Challenger is a Dodge product and the Sapporo a Plymouth product. In 1984, Chrysler Corporation will offer sport automobiles known as G- 24s in both the Dodge and Chrysler-Plymouth line to compete with General Motors' Pontiac Firebird, Chevrolet Camaros, and Ford Mustangs. Dodge will offer an individual performance model known as the Turbo Z which will not be available in the Chrysler-Plymouth line. The Chrysler-Plymouth version will be offered with electronic instrumentation which is unique. In 1984, the T-115 series station wagon will be offered by both Dodge and Plymouth and a Dodge van version of that automobile will be offered. Loan values for the similar product lines in the Chrysler Corporation line are the same. Presently, the marketing and sales functions of Dodge and Chrysler- Plymouth are separate groups. Product development of the corporation is not a separate function between the two lines; however, it is intended that these two lines compete with each other. Reliant is the best selling Chrysler-Plymouth product and the Aries is the best selling Dodge product. John Burnett, the President of Massey Dodge, pointed out that twenty Percent (20 percent) of the sales of his company are in the southside area where Caruso would locate his dealership. The north side of Jacksonville is the main sales area. The Massey dealership can and does work on all Chrysler Corporation products with the exception of Imperial and the information related to all warranty work is sent to the same zone or same location in Detroit, Michigan. The dealership has experienced decreased sales in 1902, as compared to 1981, which has been an industry experience and its officials have been counseled to increase its minimum sales responsibility in 1982. This relates to the Chrysler Corporation's expectations on the number of units sold by its dealer. The dealership at Massey sells sixty percent (60 percent) used cars and half of its new car sales relate to Dodge trucks. William Shore, the President and owner of Westside Dodge, who has been in the car business for thirty-two years, established that approximately twenty percent (20 percent) of his automobile sales are in the southside area which would be the area in which Caruso would be opening its business to sell Chrysler-Plymouths. In 1982, Westside sold 234 Colts and Challengers, 154 Aries Ks, and 86 Omnis, to include Chargers and 71 Dodge 400s, up to the month of December for a total of 545 units and for the total year sold 597 new units. Relating again to automobile sales by Westside, 464 trucks were sold by Westside in 1982, out of a total of 1,061 sales. In 1981, 808 cars out of 1,215 sales were recorded; in 1980, 533 cars out of 983 sales were recorded and in 1979, 487 cars and 344 trucks were sold. The opening of the Caruso Chrysler-Plymouth dealership is felt by Shore to be a negative influence on the sale of its K and Colt cars. Moreover, the close proximity of the existing Regency Dodge and applicant Caruso Chrysler- Plymouth would promote a competitive advantage related to service, parts, body work and sale of new and used cars, as shown by Shore's testimony. Ninety-five percent (95 percent) of Westside sales are in Duval County with five percent (5 percent) out of the county. Within the ninety-five percent (95 percent) in Jacksonville, in addition to the twenty percent (20 percent) sales in southside, ten percent (10 percent) would be in the north side and seventy percent (70 percent) in the west side. The distance between Westside Dodge and River City Chrysler-Plymouth is approximately 250 to 300 feet on the same side of the street. George Hanlon, who is a Vice President of Rebuilding Services, Inc., which owns River City Chrysler-Plymouth, and is President of River City, gave testimony. Rebuilding also has a joint dealership in Tallahassee, Florida, which sells Dodge and Chrysler-Plymouths in one location. The availability of Chrysler-Plymouth and Dodge products from the same premises in Tallahassee, Florida, has been an advantage as it relates to overhead in the operation of that business. The Chrysler-Plymouth franchise in that facility is permanent and the Dodge franchise is for a two-year period with the expectation that the Dodge franchise will be relocated in a separate facility in the future. The Rebuilding Corporation had been involved with Ray Mixon Chrysler- Plymouth on Phillips Highway in Jacksonville, Florida, but that business failed. By way of explanation, Hanlon stated that Rebuilding was unable to successfully run both the Phillips Highway store and the River City operation. River City sells primarily in Duval County and in Baker County, which latter county is west of Jacksonville and Hanlon feels that the Dodge product line is the primary competition to Chrysler-Plymouth dealerships. Reference has been made to the utilization of the same facility to construct certain Chrysler Corporation automobiles which are sold as Dodges or Chrysler-Plymouths. In particular, as shown in the response to reguest for admissions made by the Petitioners to the Intervenors, at paragraph 14 of the first request for admissions; 1983 Plymouth Voyagers and 1983 Dodge Ram Wagons; 1983 Dodge Aries and 1983 Plymouth Reliant; 1983 Dodge 400 and 1983 Chrysler LeBaron; 1983 Dodge Challenger and 1983 Plymouth Sapporo; 1983 Dodge Mirada and 1983 Chrysler Cordoba; 1983 Dodge Omni and 1983 Plymouth Horizon; 1983 Dodge 600 and 1983 Chrysler E Class; and 1983 Dodge Rampage and 1983 Plymouth Turismo/Scamp and 1983 Dodge Diplomat and 1983 Plymouth Gran Fury are produced in the same assembly plants. Responses to the second set of admissions made from the Intervenors to Petitioners also connote similarities between various products within these automobiles within the product lines offered by Dodge and Chrysler-Plymouth, of a type previously described. The request for admissions and responses are transmitted with this Recommended order.
The Issue The issues in these cases are whether Respondent violated sections 489.129(1)(i), 489.129(1)(o), and 489.1425, Florida Statutes (2007 & 2009),1/ and, if so, what discipline should be imposed.
Findings Of Fact At all times material to the administrative complaints, Mr. Organo was licensed as a certified general contractor in the State of Florida, having been issued license number CGC 1512005. At all times material to the administrative complaints, Mr. Organo was the primary qualifying agent for Bennett Marine Contracting and Construction, Inc. (Bennett Marine). On or about September 29, 2007, Jean Walker (Ms. Walker) entered into a contract with Bennett Marine to construct a dock and a tiki hut at 12305 Boat Shell Drive. The contract (the Walker contract) provided that the contractor would make application for a permit from Lee County, Florida. Mr. Organo signed the Walker contract for Bennett Marine. It is undisputed that the Walker contract did not include a written statement explaining Ms. Walker's rights under the Florida Homeowners' Construction Recovery Fund. On October 24, 2007, Bennett Marine applied for a permit to construct the dock. The application was denied October 29, 2007, because the site plan contained the tiki hut. When the tiki hut was removed from the application, the dock permit was approved. Ms. Walker paid Bennett Marine draws on the construction project. The payments were given to Mr. Organo. The payments totaled $9,200. By February 2008, a tiki hut had been constructed on Ms. Walker's property without a permit. Because the tiki hut was built without a permit, and it was in an illegal location, Lee County required that the tiki hut be removed. By April 2008, the tiki hut had been removed, and another tiki hut had been built in its place. Again, no permit was pulled for the tiki hut, and it was placed in an illegal location. Again, Lee County required that the tiki hut be removed. Mr. Organo subcontracted the construction of the tiki hut to Rick Fewell Chickees. Mr. Fewell of Rick Fewell Chickees, a Seminole Indian,2/ applied for a permit to build a tiki hut, but the application was rejected because the plot plan was not to scale, and the tiki hut did not meet the setback requirements from the water. Another tiki hut was built, and, in March 2009, Lee County again cited Ms. Walker for not having a permit for the tiki hut and for not meeting the setback requirements. In 2010, a permit was finally issued for the construction of a tiki hut on Ms. Walker's property. The permit was issued to Ms. Walker. Bennett Marine commenced work on the tiki hut without obtaining a building permit. On January 5, 2010, Bennett Marine entered into a contract with Chris Bevan (Mr. Bevan) to remove an existing dock, uninstall an existing boatlift, construct a dock, construct a tiki hut, and to reinstall the boatlift. The contract (the Bevan contract) required that the contractor obtain a City of Cape Coral building permit. The Bevan contract was signed by Mr. Organo for Bennett Marine. It is undisputed that the Bevan contract did not contain a written statement explaining Mr. Bevan's rights under the Florida Homeowners' Construction Recovery Fund. On March 17, 2010, Bennett Marine showed up on Mr. Bevan's property and commenced work, by knocking down a cantilever dock that was hanging over a seawall, removing old decking from the boatlift, and rough-framing part of the new dock. Bennett Marine worked until approximately March 25, 2010. That was the last that Mr. Bevan heard from Mr. Organo or Bennett Marine. Mr. Organo applied for a building permit for the Bevan contract on April 1, 2010. The permit was approved on April 13, 2010, but it was not issued. On May 14, 2010, the City of Cape Coral placed a stop-work order on the Bevan project. Mr. Bevan applied for an owner-builder permit for the dock construction, and the permit was issued on June 9, 2010. Mr. Bevan completed the dock construction at additional expense.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered finding that Mr. Organo violated sections 489.129(1)(i), 489.129(o), and 489.1425; imposing a fine of $250 each for the Walker contract and the Bevan contract for a total of $500, for failure to advise the owners of the recovery fund; imposing a fine of $3,000 and placing Mr. Organo on probation for two years for beginning work without a permit for the Walker contract; and imposing a fine of $1,000 and placing Mr. Organo on probation for one year for beginning work on the Bevan contract without a permit with the one-year probation to run concurrently with the probation imposed for the Walker contract. DONE AND ENTERED this 13th day of April, 2011, in Tallahassee, Leon County, Florida. S SUSAN B. HARRELL Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 13th day of April, 2011.
The Issue The issues are whether Respondent violated Subsection 489.127(1)(f), Florida Statutes (2008), for the reasons stated in the Administrative Complaints and, if so, what, if any, penalty should be imposed.
Findings Of Fact Petitioner, the Department of Business and Professional Regulation (DBPR), is the state agency charged with regulating the practice of contracting in the State of Florida. It also has jurisdiction over the unlicensed practice of contracting pursuant to Section 455.228, Florida Statutes (2008). DBPR has filed two administrative complaints charging Respondent Frank Clardy with violating Subsection 489.127(1)(f), Florida Statutes (2008), by engaging in the business of, or acting as a contractor without a license. Mr. Clardy, was not a state certified or registered contractor licensed to engage in the practice of contracting pursuant to Part I, Chapter 489, Florida Statutes, at any time relevant to this proceeding. He maintains he did not need a license, because he was acting as a salesman and not himself engaging in the business of, or acting as a contractor. The other named Respondent charged in the complaint in DOAH Case No. 08-1108, O. E. Total Services, Inc. ("O.E."), is a Florida corporation with Onel Eschevarria as its registered officer/director. The state investigator assigned to this case testified that O.E. was listed as an inactive entity by the State Division of Corporations, so she did not check to see if O.E. was a general contractor licensed by DBPR. The testimony of two witnesses, Mr. Clardy and Herbert Neff, support a finding that, at all relevant times, Onel Eschevarria, the owner of O.E., was not a licensed general contractor. Therefore, O.E. could not have been an entity registered and qualified to use his license number. Daisy Green and her late husband, Herbert Green, entered into a contract listing O.E. as the corporate entity, signed by Frank Clardy, as salesman and officer, to pay $9,351 for the installation of hurricane shutters for 17 openings in their home in Boca Raton, Florida. The license numbers on the contract were CGC A23836 and CCC 057010, and belonged to Carlos Fulmann. According to Mr. Clardy, Mr. Fulmann notified O.E. that he was unable to work with O.E. at that time, and O.E. was looking to affiliate with another licensed contractor. Nevertheless, Mr. Clardy took the measurements for the shutters at the Greens' home and accepted a check for a deposit of $3740.40. The check, dated April 11, 2006, was payable to O.E. and was deposited in the account of O.E. The shutters were never delivered and the money has not been refunded. DBPR's investigator confirmed that no permit was ever issued for the installation of shutters at the Greens’ residence. On April 18, 2006, Mrs. Green wrote a check in the amount of $1700 made payable to Frank Clardy personally, with "Deposit Shutters" on the line indicating the purpose for the check. Mr. Clardy cashed that check. That brought the total amount paid by the Greens, apparently in connection with the contract for hurricane shutters, to $5440.40. At the hearing, Mrs. Green testified that she and her husband paid $7240 of the total contract amount of $9351, leaving a balance due of $2111, as indicated by handwritten notes made on the contract. No one was sure who made the notes and there was no other evidence of additional payments arguably for hurricane shutters over and above the two checks that total $5440.40. Mrs. Green could not explain the discrepancy between the total amount of the two checks and the note on the contract. There was also conflicting testimony over the purpose for the $1700 check. Mrs. Green testified that Mr. Clardy said that the first check (for $3740.40) had been a deposit and he needed the second one (for $1700) for materials, but that contradicts her note on the check that it was inexplicably a second deposit for shutters. Mr. Clardy testified the $1700 check was paid for him to hire two crews to perform other work for the Greens, including replacing a side door in the garage with a hurricane door, repairing woodwork around the door, repairing cement in the garage, replacing and painting fascia boards, and installing a pool rail. Mr. Clardy testified that he had a written contract for this work but was unable to find it. Mrs. Green testified that she and her husband paid $250 to Mr. Clardy to fix the side door to their garage, and that they also separately paid someone he recommended to install handrails for the pool. Mrs. Green's testimony appears to be more likely truthful than Mr. Clardy’s based on a handwritten and signed receipt that Mr. Clardy apparently gave the Greens that reads: Paid in full Side door facia boards hand rail to pool $250.00 Mr. Clardy acknowledged that his signature was on the receipt but claimed it was altered after he signed it. In support of his position, Mr. Clardy pointed out that his name, as printed on the receipt as "Claridy" is misspelled. Based on his acknowledgement of his signature, his claim that the receipt does not accurately represent work he performed for $250 is rejected. Ivan M. Rubin entered into a contract with Mr. Clardy on June 27, 2006, to pay $5600 for the installation of hurricane shutters at his home in Boynton Beach. The corporate entities listed on the Rubin contract were Access-Ability, Inc. (Access- Ability) & O. E. Total Services, Inc. Frank Clardy signed as salesman and officer. The license number on the contract was CGC 051895, which is registered with the State as the certified general contractor license number for Herbert John Neff and Access-Ability as a qualified business. Mr. Rubin gave Mr. Clardy a check for the deposit in the amount of $2600, made payable to Access-Ability. That check was given by Mr. Clardy to Mr. Neff at Access-Ability. Soon after, Mr. Rubin had additional questions about the shutters and called the telephone number on the contract. When he was unable to reach Mr. Clardy, Mr. Rubin stopped payment on the check. Although he remembered that the amount of the check was for $2500, not $2600, Mr. Neff acknowledges that he received the check from Mr. Rubin on which the bank payment was stopped. On July 11, 2006, Mr. Clardy explained, according to Mr. Rubin, that he had been in the hospital and had paid for the materials for the shutters from his personal funds. So, Mr. Rubin wrote another check for $2600 made payable to Frank Clardy personally. At hearing, Mr. Clardy admitted having never paid for shutters for the Rubins. Both Mr. and Mrs. Rubin said Mr. Clardy told them he owned O.E. and that they believed it because he signed the contract as “salesman” and "officer." Mr. Clardy testified that he ordered the hurricane shutters for the Green and Rubin projects, and that, as he had done with the Greens' deposit, he cashed Mr. Rubin's second check and gave the money to Onel Eschevarria, who took it and is now in jail. As a result of not being paid by O.E., the manufacturer refused to deliver the products. The Rubins did not receive the shutters and have not received a refund. There was never a permit application filed for the Rubin project. After not receiving the shutters and not getting help contacting Mr. Clardy after talking to his mother and stepfather, Mr. Rubin checked the license number, found it was issued to Mr. Neff, and contacted him. Mr. Neff told Mr. Rubin that he could find Mr. Clardy in the card room of a casino in Coconut Creek. Mr. Rubin went there to look for him, but Mr. Clardy was not there. Mr. Neff testified that he has been a licensed general contractor in Florida since 1990, that the only company he qualified for the use of his license was Access-Ability, and that he knew it was unlawful for an unlicensed person to subcontract with a licensed contractor. Mr. Neff was never qualified by the state to use his license to secure permits for O.E., nor for Access-Ability and O.E. as a joint venture. Mr. Neff confirmed that he and Mr. Clardy discussed a business proposal in which Mr. Clardy would get the business and arrange for the installation of shutters, and Mr. Neff would get the building permits. According to Mr. Neff, Mr. Clardy told him that he was a salesman for O.E., that O.E. was a licensed contractor, and that he was negotiating to acquire O.E. Mr. Neff testified that he never entered into a contract with Mr. Clardy and "[t]he arrangements we were making were just left up in the air because we couldn't conclude it." Mr. Neff's testimony is rejected as totally inconsistent with the evidence. He contradicted his claim that Mr. Clardy led him to believe that O.E. was licensed, when he also testified that he remembered reading a proposal from Mr. Clardy, and saying ". . . I couldn't sign it because it contained a built-in violation of my license," because O.E. was not licensed and was not owned by Mr. Clardy. At the hearing, he said it looks like his signature, that "it looks like he did" sign the following agreement: Date: Feb 20, 2006 To: ACCESS-ABILITY, INC Attn: Mr. HerbNeff 610 E. Sample RD Pompano Beach, FL 33064 Mr. Neff: We have decided to use your services of installing shutters and pulling permits for the clients we sign up with 0. E. Total Services, Inc. Our company will be the sales company for Access -Ability, Inc. This is the way we are going to work with your company. We will sign up the client take the deposit wait for the check to clear the bank and then issue you a cashiers check for the amount of the deposit. We will pay your company $3 .00 per square foot to install the HV Bertha shutters and pull the necessary permits. You will then issue O.E. a cashier's check back for the amount minus the $3.00 a square foot to install the HV Bertha Shutters and pull the permits needed for each job. Once the job is signed up and you issue us a cashier's check for that job, O.E. will order the material from our supplier(s) and give you a copy of the purchase order placed to our supplier with the date the product will be in stock for that particular job. Also O.E. will give Access-Ability a form that gives the clients name and address with the square footage of that job. It will also state the deposit of the job and the date the job should be installed. If Access - Ability, Inc. agrees on these terms please sign the bottom of this letter and return it back to us as soon as possible. I think this will be a profitable venture for both companies and look forward to working with you and your company. Respectfully and Sincerely, The letter was signed by Frank Clardy, as Vice President of Sales for O.E. Total services, Inc., and Herbert J. Neff, as Authorized Representative for Access-Ability, Inc. Mr. Neff agreed, regarding the letter, that [i]t provided [for] me to pull permits and then have someone else collect the money, and you're not allowed to do that. Now, the only way that could have been done is if Mr. Clardy had become licensed -- had a license, if O. E. Total Services was actually licensed. . . ." He acknowledged further that he knew ". . . they never had a license. . ." Mr. Neff testified that he never received any money for the work that was supposed to have been done for the Greens and the Rubins. He admitted having created a spreadsheet to keep track of money paid to him by O.E. to get permits for their customers, but claimed the money was not tied to or derived from any particular customer. According to Mr. Neff, funds were paid to him in advance by O.E. and held until O.E. provided him a permit application package to file. In addition to the checks, Mr. Neff admits having received cash from O.E. and from Mr. Clardy. The evidence, including his admissions, completely contradicts his claim of not having an illegal agreement with O.E. Mr. Neff’s testimony that he was not aware of the Green and Rubin contracts until they complained that their shutters had not been delivered is also rejected as inconsistent with the evidence. On his spreadsheet, Mr. Neff listed the name "Herb Green" with $500 in the column headed "Fee" and $100 in the column headed "Permit & NOC” (meaning notice of commencement), and Mr. Neff admitted that he received the check on which Mr. Rubin later stopped payment. Mr. Clardy placed advertisements soliciting business for Access-Ability, with Mr. Neff's license number on them and Mr. Clardy's telephone number as the contact for customers seeking free estimates. He signed an exhibit agreement and set up a booth at a shopping mall to promote sales for Access-Ability. Mr. Neff's claim that he was unaware of the advertisements is contradicted by his statement that he called Mr. Clardy to complain that the first advertisement violated the law, by having both the names of Access- Ability and O.E. on it. He testified that only the name of the company that was qualified to use his license number, Access-Ability should have appeared on the advertisements. Mr. Neff testified that Mr. Clardy told him that he would be setting up a mall kiosk, but unpersuasively claimed that he did not know that he would be advertising for Access-Ability until he arrived at the mall. Mr. Neff claimed he never authorized Mr. Clardy to use 4100 Power Line Road as his address, yet he used the same address in a notice of commencement after acknowledging, in a written proposal to install shutters that he submitted to a homeowner ". . . to complete and comply with the contract signed . . . with Frank Clardy." The evidence, including the contradictions by Mr. Neff, support Mr. Clardy's claim that O.E. and Mr. Clardy were authorized to use Mr. Neff's license number on contracts, advertisements, and business cards. Mr. Clardy testified that he worked as a salesman for Access-Ability, based on their agreement. He also worked, he claimed, as a salesman for O.E., from February to August 2006, when O.E. stopped paying him. He compared his role to that of any salesperson employed by a home improvement store. DBPR's investigator confirmed that neither Frank Clardy nor O.E. and Access-Ability as a joint venture is a state-licensed general contractor or a registered qualified business. DBPR's investigative costs were $280.62 for the Green case and $333.56 for the Rubin case.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner enter a Final Order finding Respondent Frank Clardy guilty of violating Section 489.127(1)(f), Florida Statutes (2008); imposing an administrative fine in the amount of $5,000 and requiring the payment of investigative costs in the amount of $333.56 in DOAH Case No. 08-1084 (DBPR Case No. 2006-062380); and imposing an administrative fine in the amount of $5,000 and requiring the payment of investigative costs in the amount of $280.62 in DOAH Case No. 08-1108 (DBPR Case No. 2006-053353). DONE AND ENTERED this 18th day of February, 2009, in Tallahassee, Leon County, Florida. S ELEANOR M. HUNTER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 18th day of February, 2009. COPIES FURNISHED: Sorin Ardelean, Esquire Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399 Frank Clardy 5830 Eagle Cay Lane Coconut Creek, Florida 33073 G. W. Harrell, Executive Director Construction Industry Licensing Board Department of Business and Professional Regulation Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-0792 Nancy S. Terrel, Hearing Officer Office of the General Counsel Department of Business and Professional Regulation Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-0792 Ned Lucynski, General Counsel Department of Business and Professional Regulation Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-0792
Findings Of Fact Puckett Oil Company, at times pertinent hereto, operated a full-service gasoline and auto service station at 7251 Pensacola Boulevard, Pensacola, Florida. The station at that site performed a complete range of automotive repairs, including lubrication and oil changes. These services are typical of such full-service service stations. On or about June 27, 1986, the operator of that station which was owned by Puckett, Mr. Winters, discovered a discharge of used oil at the site. The discharge occurred because the operator believed that used oil had been drained into an underground storage tank on a routine basis at the facility, as the oil was changed in customer vehicles. In fact, it developed that, unbeknownst to Mr. Winters, the tank had been removed by the prior land owner. This resulted in repetitive contamination of soil and groundwater at the facility, since the oil poured into the floor drain at the station, after being removed from the crank cases of customer vehicles, was in reality draining into the ground, instead of into a storage tank. After becoming aware of this problem, Puckett filed an Early Detection Incentive (EDI) Program Notification Application, reporting the discharge of used oil to the Department, pursuant to Section 376.3071, Florida Statutes (Supp. 1986). That EDI notification application form lists used oil as a "product." Puckett notified the Department of its intent to proceed with voluntary cleanup at the Puckett site pursuant to Section 376.3071(11) and (12), Florida Statutes (Supp. 1986), and to seek reimbursement for the cost of that contamination cleanup pursuant to Section 376.3071(12), Florida Statutes (Supp. 1986). The Department, in view of the request, conducted a site inspection on December 19, 1986. The Department's inspection personnel prepared an EDI Program Compliance Notification Checklist on the Puckett site. This report noted the circumstances of the discharge, to the effect that the used oil tank had been removed while used oil was still being disposed of through the drain at the service station. Thereafter, by its Order of April 16, 1987, the Department advised Puckett that its site was not eligible for "Super Act" reimbursement. The denial of eligibility was based on the DER's position that used oil was not "petroleum" or a "petroleum product" for purposes of Section 376.301(9) or (10), Florida Statutes (Supp. 1986). On May 8, 1987, Puckett filed a Petition for Formal Proceedings, alleging, among other things, that used oil is "petroleum" or "petroleum product" within the meaning of the "Super Act" and that the Department is estopped from denying "Super Act" reimbursement eligibility for voluntarily reported discharges of used oil. Inasmuch as the DER conducted inspections of the site in question, recording its findings, the Department was aware of the circumstances of the discharge; that the used oil tank had been removed and that oil had continued thereafter to be placed in the drain facility, thus contaminating the soil where the used oil disposal tank had formerly been placed. The Department did not raise the eligibility exception involving gross negligence in the Order of April 16, 1987, however, nor by any other vehicle until the filing of its Motion for Continuance with the Hearing Officer on August 31, 1987. Additionally, in response to a Request for Admissions served by Puckett, the Department admitted that the sole basis for denial of the reimbursement eligibility for the Puckett site was the fact that the substance discharged was "used oil," which the Department contends is not petroleum or petroleum product and thus is not a proper subject for reimbursement of related clean up and decontamination expenses. Uncontroverted evidence establishes that in August 1984, eleven oil changes at the Puckett site generated 3.5 quarts or about 9 1/2 gallons of used oil. Using this figure as an average, until the time the discharge was discovered 22 months later, the Puckett site generated approximately 210 gallons of used oil. Mr. Winters testified that he believed he had a 500 or 1,000 gallon used oil tank. Puckett's used oil was disposed of by inserting the drain bucket on the floor drain. The floor drain is a receptacle with an adapter on it for the oil drain bucket. Although the floor drain system appeared to be a working system, the underground used oil storage tank at the Puckett site had been removed, unbeknownst to Mr. Winters. It was apparently removed by Exxon Corporation, the previous site operator. It was Exxon's practice to remove fuel tanks from non-operational stations, such as the Puckett site was at the time it was sold to Puckett. It was not their normal practice, however, to remove used oil storage tanks. Mr. Winters, in his sixteen years of operating service stations, has never experienced a floor drain with such an adapter that was not connected to an underground storage tank. Further, he had previously leased a service station that had been purchased from Exxon after being closed for seven years and the used oil tank was still in place at the time he took possession of the station. He asked the person responsible for closing the Exxon station (the Puckett site) where the used oil tank was located. That person responded by pointing to an area of landscape shrubbery where a galvanized pipe could be seen protruding from the ground. A used oil collection company attempted to pump the contents of the tank using that pipe. Three large holly bushes were growing undisturbed over the area where Mr. Winters had been told the tank was located. It thus appeared to Mr. Winters that the tank could not have been removed. There was no evidence that Mr. Winters attempted to conceal the discharge of the oil or that he continued to dispose of the used oil in the floor drain after discovering that the tank had been removed. If the floor drain had not become stopped up, Mr. Winters likely never would have begun looking for the presence of the tank. A used oil collection company never was able to pump any used oil from the pipe supposedly connected to the tank. It was Mr. Winters' belief that used oil collection companies normally came to service stations after closing hours to pump the used oil storage tanks, so they can avoid paying for the used oil. It was for this reason, he believed, that he rarely had seen a used oil collection company trying to pump oil from such a storage tank. He was thus not concerned when the company reported that it could pump no used oil from the tank because he believed that another used oil collector had previously drained it. The used oil discharged at the Puckett site consists of used engine crank case oil with an estimated two percent of used transmission oil. Used oil at the Puckett site is not mixed with solvents or other hazardous wastes. Puckett does not accept neighborhood collections of used oil. An assessment of the contamination at the Puckett site was conducted by Delta Environmental Consultants. Delta had an analysis of soil samples prepared by Pioneer Laboratories and an analysis of ground water samples by Savannah Laboratories. Dr. Litt, the Petitioner Puckett's expert witness, opined, based on the contamination assessment, that the contamination was due to used oil or "used oil fuel" instead of "hazardous waste fuel" or hazardous waste. Dr. Litt relied on the testimony of Mr. Winters to the effect that solvents or other hazardous wastes were not mixed with the used oil at the Puckett site in the service station's operations. Based on the soil and ground water analyses supplied him, Dr. Litt found an absence of halogenated solvents which would commonly be mixed with used oil, thus corroborating Mr. Winters' testimony that the used oil at the Puckett facility was not known to have been mixed with any hazardous wastes. The soil analysis indicates a level of organic halogens of 1,090 parts per million. This level might raise a presumption, under relevant EPA regulations, that the oil had been mixed somewhat with hazardous wastes, but Dr. Litt established that indeed no mixing had occurred based upon Mr. Winters' testimony, as well as the fact that the testing method used is accurate to only a plus or minus 700 parts per million in a total range of 1,000 to 2,000 parts per million. Indeed, some halogen levels may be attributed to natural soil conditions. Thus, the finding of 1,090 parts per million organic halogens could be as much as 700 parts per million in error, and some of this quantity can be due to natural backgrounds. Additionally, the level of individual chlorinated solvents sampled indicated no mixing of used oil with typical hazardous wastes. International Petroleum Corporation International Petroleum Corporation (International) has operated an oil storage plant and used oil reclamation facility at 105 South Alexander Street, Plant City, Florida, since May 1980. That site contains approximately 10 acres. There are two on-site tank farms containing 17 above-ground stationary tanks and two underground tanks. One underground tank holds 10,000 gallons and is used to store diesel fuel. The other tank holds 5,000 gallons and stores virgin gasoline. The above-ground tanks range in size from 8,000 to 212,000 gallons and are used to store oil, both used oil and new oil. All the tanks have been registered with the DER in accordance with its rules and are a part of the DER's "stationary tank system." The plant site also contains an office building and a testing laboratory which provides an array of testing services. The lab contains an atomic absorption unit, kinematic viscosity baths, API gravity hydrometers, distillation equipment and a gas chromatography. International uses this equipment, operated by a trained chemist, to test incoming loads of oil for such things as viscosity, flash point, API gravity, heavy metals, halides, etc. Since 1980, International has received, processed and sold more than 5,000,000 gallons of oil from this facility. The oil processed through the facility includes virgin kerosene, diesel, jet fuel and oils of various grades ranging from ASTM grade numbers 1-4 (the distillates) and ASTM grade numbers 5, 6 and "bunker C" (the residuals). The residual oils are those oils left after the lighter distillates are removed through the vacuum distillation process. The amount of residual oils processed since 1980 is relatively low, less than fifteen percent of the total amount of oils processed at International's facility. Out of 7,000,000 gallons processed in an average year, the plant may receive two or three carloads of grade numbers 5, 6 or bunker C. From 1980 to 1985, approximately 7,000,000 to 12,000,000 gallons of virgin oils were processed at the facility. In each of those years, from 4,000,000 to 7,000,000 gallons of used oil were also processed. Over that five- year period approximately 20,000,000 gallons of used oil were processed and sold through the International facility. International blends virgin oils received at the plant with used oils to meet particular specifications of a customer. It uses its own trucks to collect oil from service stations, automobile dealerships and other industrial accounts. Oil is then delivered to the plant and tested for basic constituents before being placed in an appropriate storage tank. International tests all incoming used oil to see if it meets the criteria for so-called "on spec" used oil or "off spec" used oil. These specifications were established by the EPA in 1985 and adopted by the DER. Used oil meeting these criteria may be burned as fuel in industrial and non-industrial boilers without limitations. The criteria are as follows: Constituent/Property Allowable Level Arsenic 5 ppm maximum Cadmium 2 ppm maximum Chromium 10 ppm maximum Lead 100 ppm maximum Total Halogens 4,000 ppm maximum Flashpoint 100 degrees Fahrenheit minimum International has followed a practice of rejecting incoming used oil which fails to meet the criteria of 1,000 parts per million or less of total halogens, which is the rebuttable threshold presumption of "hazardous waste" oil. International makes an effort to ensure that used oil it receives and processes is thus "on spec." It regularly sends samples to independent laboratories to cross-check its own laboratory testing results. It is selective in its sources of used oil and typically obtains used oil from large companies such as the Mack truck shops, car dealerships and other large volume producers of used oil. These are sources unlikely to be contaminated with any hazardous materials. The "on-spec" used oil accepted by International is placed in separate storage tanks, segregated according to water content and API gravity, viscosity and lead content. It is then blended with virgin oils to meet the specification of various customers. Heat is sometimes supplied in order to drive off water. The used oil undergoes no further treatment or alteration, being merely tested and blended to meet the customer's requirements. Often blending is unnecessary. When a truckload is received, tested and found to meet specifications, it is sometimes directly delivered to a customer. International sometimes obtains used oil without payment from its suppliers and has often purchased it from the generators of used oil. It always sells it to its customers, however. It has a definitely defined industrial market as a fuel commodity and is recognized as having value when sold for such purposes. It may sell for as little as 30 cents per gallon and has sold for much more than that, depending on the market conditions prevailing at the time of sale. It is used both as a burner fuel for industrial and non-industrial boilers, as well as a key constituent in the phosphate beneficiation process. International sells approximately 40 percent of its used oil production to asphalt plants where it is used to fire burners and to rock drying mills, also as a burner fuel. It sells approximately 60 percent of its production of used oil to the phosphate companies for the beneficiation process. In that process, oil is used with other reagents and fatty acids to "float" phosphate out of the rock or ore in which it is contained, allowing it to be skimmed and separated. Although the oil is not burned as a fuel in this process, its use by the phosphate plants substitutes for virgin oils of ATM grade numbers 4 and 5 (heating oil) or in some cases kerosene or number 2 diesel. In 1985, International produced 4,295,101 gallons of used oil which were burned as a fuel by its customers and in 1986 produced 2,221,652 gallons of used oil which were burned as a fuel. The used oil which it sells for the beneficiation process meets DER and EPA standards for "on spec" used oil fuel, except for the lead content, which fact is immaterial to its use for the beneficiation of phosphate. The used oil sold for phosphate purposes does meet pertinent regulatory standards for "off spec" used oil, in any event, so that it could be burned as industrial furnace fuel under EPA and DER rules. The sale of used oil for final use as a burner fuel is very common. Many oil recyclers pick up used oil and take it directly to asphalt plants for burning as fuel without any blending or other treatment. International's sale of 60 percent of its used oil for phosphate processing is unique in the used oil industry, but is attributable to its close proximity to the central Florida phosphate plants. Most oil recycling facilities sell a larger percentage of their product for burner fuel than does International. The used oil which International sells as burner fuel is comparable to heating oil, ASTM grade numbers 2 or 4 and has a similar viscosity, specific gravity and flash point. It can be poured and handled without preheating. Residual oil, however, such as grade numbers 5 and 6 (bunker C) are very viscous and require preheating in industrial boilers or burner furnaces before it can be burned as fuel. The used oil sold by International Petroleum is more similar to ASTM grades 2 and 4 (the distillates) than it is to grades 5 and 6 (the residuals). Petroleum hydrocarbon contamination of the soil and groundwater at the International site was discovered in December 1983 by DER personnel. International retained a consultant to assess the site and determine the nature and extent of any contamination. It has already expended more than $50,000 in an effort to investigate and clean up petroleum contamination at its site. DER conducted a soil and groundwater site investigation in 1985, which showed that hydrocarbons were in the soil and that volatile organics were also present in the groundwater at the site. International has provided all background information requested by DER on site conditions existing prior to cleanup. This was for purposes of showing its entitlement to reimbursement eligibility. The contamination at the site consisted mostly of small leaks, drips and spills associated with loading and unloading railway tank cars, as well as stationary tanks, over at least a five year period. The storage tanks include integral piping systems, and some leakage occurred at hose or pipe connections. The petroleum products placed in the various tanks in the tank farm vary, so that the contamination existing at the site cannot be differentiated or attributed separately to used oils or virgin oils, to distillates (ASTM grades 1-4) or the heavier residuals. All are made up of hydrocarbons and their breakdown products in the ground are essentially indistinguishable. The record does not establish that any major or significant oil spills have occurred at the plant site and does not show that the operators have been particularly negligent or have failed to conform to industry standards. International has already taken remedial action by building high retaining walls and by removing contaminated dirt where repeated drippages occurred near the railroad tracks. Employees have received training to avoid leaks from hoses and pipes and have been instructed to clean up even small spills immediately. Valve equipment has also been upgraded. As a result of these efforts, subsequent testing of the monitoring wells at the site has shown that the groundwater condition has markedly improved and it may be possible that the cleanup action already taken will be sufficient to accord with regulatory standards for groundwater. Used Oil as "Petroleum" or "Petroleum Product" Used oil is derived from crude oil and consists primarily of engine lubricating oil which is a form of hydrocarbon and a special fraction of the original crude oil. The lubricating oil consists of vacuum distilled base oil and atmospheric distillate portions of crude oil produced at a refinery and further refined by processes involving wax removal and solvent extraction. The remaining portion of lubricating oil consists of additives added to the base oil to improve certain physical properties such as rust inhibition and to improve viscosity. Many of these additives, in turn, are substantially comprised of base oil themselves. Used oil also typically contains gasoline which condenses in the crank case, water, gasoline additives, lead sulfates, carbonates or oxides and other partial combustion products of gasoline motor fuel. Lead contained in used engine oil is produced by engines running on tetraethyl lead gasoline. This lead accumulates in the form of lead sulfate, lead carbonate or lead oxide, rather than tetraethyl lead in its original form. The sulfates, carbonates and oxides are insoluble and are not likely to be leached out by groundwater, in contrast to tetraethyl lead. Use of the oil does not change its basic chemical structure. The oil may be contaminated by various impurities resulting from partial combustion of gasoline, from rust, from condensed water and so forth, but these are essentially mechanical mixtures, rather than alterations of the chemical structure of the oil itself. Aside from water, when oil is pumped from the ground at the well, two substances are produced at the well head: crude petroleum oil and natural gas, including casing head gas. Used oil is similar in nature to the petroleum products specifically listed in Section 376.301(10), Florida Statutes (Supp. 1986). The predominant use of used oil is as a fuel, similar to diesel, kerosene and gasoline. A fuel is a material burned as a source of heat, rather than for disposal purposes. It can be either for propulsion purposes or for stationary equipment such as industrial boilers, asphalt plants and the like. Kerosene and diesel fuel are similar in terms of viscosity and BTU value to ASTM grade number 2 fuel oil. Used oil is thicker and more viscous than ASTM grades 2, 3 or 4, but not so viscous as grades 5 or 6. Neither does it have as high a BTU content as grade number 5 fuel oil. ASTM grade number 5 residual oil must be preheated before burning as a fuel. Viscosity is too high for the material to atomize properly at normal temperature. In fact, used oil can be used as a blending agent to blend down or reduce viscosity of grade number 5 oil and reduce the temperature to which number 5 oil must be preheated before burning. With some variance from one sample to another, used oil typically is similar in viscosity and BTU value to ASTM grade number 3 or 4 fuel oil. Gasoline, kerosene, diesel and used oil are all hydrocarbons which burn readily. These materials are mixtures of hydrocarbons, with additives which do not materially affect the properties of the hydrocarbon fuel, or its use as a fuel. Gasoline, in fact, is not classified by ASTM grade. Parenthetically, it thus appears that the Legislature did not intend to limit the scope of "petroleum product" by such considerations as only viscosity and BTU value. "Petroleum products" are commonly used as fuels and are typically stored at service stations or storage tank facilities which can pose a danger of causing inland soil or water contamination, if improperly discharged. Gasoline, kerosene, diesel and used oil are commonly stored in tanks at facilities throughout the state. Used oil does not have any meaningful similarity to the substances specifically excluded from the definition of petroleum or petroleum product by Section 376.301(10), Florida Statutes (Supp. 1986). Used oil, for instance, bears little similarity to liquefied petroleum gas or to petrochemical feed stocks, which latter products are used to supply the raw materials for chemical plants manufacturing petrochemicals of many types. Used oil only is similar to these substances to the extent that it is within the broad family of hydrocarbons derived from crude oil or gases, derived in turn from petroleum wells. Likewise, the ASTM Grades 5 and 6 residual oils are based on the residuum or the heave viscous material left after the distillation process is applied to crude oil. This residuum is the material left that is too heavy to further distill. On the other hand, crank case lubricating oils and transmission oils, which are typically involved in the category "used oil" or "used oil fuel," are derived by the process of vacuum distillation such that they are distillation products, as opposed to residual products. "Bunker C" oils, and marine bunkering oils generally, are residual fuel products and, together with asphalt oil, are not used as fuel, at least not at inland locations. These materials likewise are typically not stored at inland service stations or bulk storage or reclamation facilities and locations. Both the Federal Environmental Protection Agency (EPA) and the Florida DER, in their regulatory scheme concerning used oil, encourage its collection and recycling. Used oil is typically recycled as a fuel and as a lubricant, by being separated from its contaminants by a re-refining process. Indeed, the oil constituent of used oil is not altered by use as lubricating or transmission oil, but rather is rendered in a "used oil" state by being subjected to various contaminants. It is not presently economically viable, given low virgin oil prices, to recycle used oil for lubricating oil. Thus, the two alternatives for disposition of used oil are to deposit it in landfills, a practice now generally prohibited by the DER and other regulatory authorities, or to use it as a fuel. Indeed, the use of used oil as a fuel is about the only practical way to dispose of it safely and legally in view of former uses, such as road oiling for dust control and weed abatement, now being prohibited in potable water aquifer areas. Section 403.75(2), Florida Statutes (1985). Thus, it is not only common and general practice to burn used oil as a boiler fuel and as a fuel in various industrial and utility plants, at the present time-that is almost the only manner in which it can be legally and safely disposed of. The Department itself has a policy encouraging the collection and recycling of used oil, as lubricating oil, fuel or as a feed stock in the manufacturing of other petroleum products. (See IP Exhibits 17, 18 and Joint Exhibit 5 in evidence.) Under EPA regulations which have been adopted by DER, used oil is not regulated as a hazardous waste. Under these regulations, the EPA has adopted a "rebuttable presumption of mixing" in order to distinguish between used oils which have been contaminated through mere use and used oils which have been mixed with hazardous wastes and therefore must be regulated as hazardous wastes or "hazardous waste fuel." Certain hazardous, halogenated constituents, such as chlorinated solvents, are the hazardous wastes typically found mixed with used oil. The "presumption of mixing" provides that any used oil containing greater than 1,000 parts per million of total halogens (such as chlorine, fluorine, bromine, iodine and similar substances) is presumed to have been mixed with a hazardous waste and will be regulated as "hazardous waste fuel" under 40 CFR Part 266, Subpart D, rather than as "used oil fuel" under 40 CFR Part 266, Subpart E. Hazardous waste fuel is essentially a hazardous waste with a BTU value of at least 5,000 BTUs per gallon. Hazardous waste fuel burning is tightly regulated by the EPA and DER. The presumption of mixing can be rebutted through a demonstration that the used oil in question has not been mixed with any hazardous waste. If mixing of used oil with hazardous wastes is known to have occurred, however, the oil is regulated as a hazardous waste when it is burned for energy recovery. Once it has been determined that a particular used oil is a used oil fuel and not a hazardous waste, the used oil falls into one of two categories: "Specification used oil fuel" or "off-specification used oil fuel." Specification used oil contains essentially the same toxic constituents as virgin oil fuels. Off-specification used oil fuel contains elevated levels of toxic components. Most used oil is off-specification, particularly if it is made up of mixtures of several types of used oil. If oil comes from a service station which was used in an engine burning leaded gasoline it would likely result in the used oil from that engine being off-specification due to the toxic lead compounds which would be present in the oil. If the oil was used in an engine which burned unleaded fuel, it is likely that it would be within specification limits for "on-specification used oil." Neither type of used oil is regulated as hazardous waste when burned as fuel, however. For purposes of determining whether an oil fuel is off-specification on on-specification, the EPA has developed a list [at 40 CFR Section 266.40(e): of contaminants, with the allowable levels for each contaminant, below which oil will be determined to be "on specification." Those contaminants are arsenic (5 ppm), cadmium (2 ppm), chromium (10 ppm), lead (100 ppm), with total halogens not exceeding 4,000 ppm in order for used oil to be within specification for nonindustrial burning. Specification used oils may be burned as fuel in nonindustrial boilers, including schools, hospitals, and apartment buildings. Off-specification used oil fuel may be burned in industrial furnaces, industrial boilers, utility boilers and some space heaters meeting certain federal safety requirements. Moreover, EPA regulations allow the blending of off-specification and specification used oil so that the resultant used oil, when burned, meets the specifications for nonindustrial burning. The Department's policy makers who were responsible for the initial decision that used oil is not petroleum or a petroleum product did not consult with certain key personnel in the Department's own used oil section concerning whether oil should be considered as a petroleum or petroleum product. In fact, Mr. Gentry, who is involved in policy making regarding the subject matter of the "Super Act," was not aware that the Department has a program to encourage the burning of used oil as a fuel nor the fact that used oil is extensively burned as a fuel in Florida.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties, it is, therefore RECOMMENDED that the applications of Puckett Oil 4 Company and International Petroleum Corporation for eligibility for reimbursement pursuant to Section 376.3071(12), Florida Statutes (Supp. 1986), be granted. DONE and ENTERED this 7th of June, 1988, in Tallahassee, Florida. P. MICHAEL RUFF Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 904/488-9675 FILED with the Clerk of the Division of Administrative Hearings this 7th day of June, 1988. APPENDIX TO RECOMMENDED ORDER CASE NOS. 87-2161 & 87-2465 Petitioners' Proposed Findings of Fact: 1-23. Accepted. 24. Rejected as subordinate to the Hearing Officer's findings on this subject matter. 25-38. Accepted. 39-40. Rejected as subordinate to the Hearing Officer's findings and as not directly material. 41-45. Accepted. 46-48. Rejected as not material and relevant. 49-54. Accepted. 55. Rejected as subordinate to Hearing Officer's findings on this subject matter. 56-58. Accepted. 59. Rejected as subordinate to Hearing Officer's findings on this subject matter. 60-63. Accepted. 64. Rejected as subordinate to the Hearing Officer's findings on this subject and as unnecessary to the resolution of material issues. 65-70. Accepted. 71. Rejected as irrelevant. 72-77. Rejected as subordinate to the Hearing Officer's findings on this subject. Accepted, but not directly relevant and material. Accepted. Respondent's Proposed Findings of Fact: 1-5. Accepted. 6. Rejected as subordinate to the Hearing Officer's findings on this subject matter. 7-8. Rejected as subordinate to the Hearing Officer's findings on this subject matter and as immaterial, in part, because the Hearing Officer, in determining whether the material at the subject sites meets the statutory definitions at issue is not, by the "pleading" confronted with the issue of whether any and all types of "used oil" meet these definitions, rather merely those types comprising the contamination at Petitioner's facility. The Hearing Officer cannot, in this proceeding, issue declaratory statements or advisory opinions. Accepted. Accepted, except for the next to last sentence. 11-12. Accepted. Accepted as to its historic accuracy, but not as a resolution of the essential issue presented. Rejected as immaterial in the absence of a Motion to Compel further, more detailed answers. Accepted as to its historical accuracy, but, for reasons similar to the ruling next above, not as probative of the appropriate, timely raising of the issue of gross negligence. 16-24. Accepted. 25-26. Rejected as subordinate to the Hearing Officer's findings on this subject matter. Accepted. Accepted as to its historical import. 29-38. Accepted. 39. Rejected as subordinate to the Hearing Officer's findings on this subject matter and as contrary to the preponderant evidence of record. 40-43. Accepted. 44-45. Rejected as subordinate to the Hearing Officer's findings on this subject matter. Rejected as not constituting a finding of fact, but, rather, a conclusion of law and statement of policy. Rejected as contrary to the preponderant evidence, as subordinate to the Hearing Officer's findings and as largely immaterial. Rejected as subordinate to the Hearing Officer's findings on this subject matter. Accepted. Rejected as subordinate to the Hearing Officer's findings on this subject matter; as being partially immaterial and as a discussion of policy and not a pertinent finding of fact. 51-53. Rejected as constituting legal argument and not a finding of fact. 54-55. Rejected as constituting legal argument. 56. Rejected as subordinate to the Hearing Officer's findings on this subject matter and as contrary to the preponderant weight of the evidence. 57-58. Rejected as - subordinate to the Hearing Officer's findings on this subject matter. Accepted. Rejected as subordinate to the Hearing Officer's findings on this subject matter. 61-63. Rejected as subordinate to the Hearing Officer's findings on this subject matter and as contrary to the preponderant weight of the evidence. Rejected as subordinate to the Hearing Officer's findings on this subject matter and as contrary to the preponderant weight of the evidence and as constituting, in part, legal argument instead of fact finding. Accepted. Rejected as subordinate to the Hearing Officer's findings on this subject matter. Rejected as subordinate to the Hearing Officer's findings on this subject matter. Rejected as subordinate to the Hearing Officer's findings on this subject matter and as contrary to the preponderant weight of the evidence. Accepted. Rejected as subordinate to the Hearing Officer's findings on this subject matter and as contrary to the preponderant weight of the evidence. Accepted. Rejected as subordinate to the Hearing Officer's findings on this subject matter. Rejected as subordinate to the Hearing Officer's findings on this subject matter and as contrary to the preponderant weight of the evidence. Accepted. Rejected as subordinate to the Hearing Officer's findings on this subject matter, as contrary to the preponderant weight of the evidence and, standing alone, of scant materiality in proving whether used oil is a "petroleum product" or a "fuel commodity." Rejected as contrary to the preponderant weight of the evidence. 78-80. Accepted in part, but not as to its material import and subordinate to the Hearing Officer's findings on this subject matter. 81-84. Rejected as subordinate to the Hearing Officer's findings on this subject matter and as contrary to the preponderant credible evidence. 85. Rejected as subordinate to the Hearing Officer's findings on this subject matter and as contrary to the preponderant credible evidence and as largely immaterial. 86-87. Rejected as immaterial to the ultimate factual and legal issues. 88-89. Accepted. Rejected as subordinate to the Hearing Officer's findings on this subject matter and as contrary to the preponderant credible evidence. Accepted. 92-93. Rejected as subordinate to the Hearing Officer's findings on this subject matter. 94-95. Rejected as subordinate to the Hearing Officer's findings on this subject matter and not in itself material. Rejected as subordinate to the Hearing Officer's findings on this subject matter. Rejected as not comporting with the preponderant weight of the evidence and as immaterial. Rejected as immaterial and irrelevant. Rejected as subordinate to the Hearing Officer's findings and as not directly material and relevant. Rejected as not in accordance with the preponderant weight of the evidence. Rejected as subordinate to the Hearing Officer's 4 findings on this subject matter. 102-103. Rejected as subordinate to the Hearing Officer's findings on this subject matter and as to its purported material import. 104. Rejected as subordinate to the Hearing Officer's findings on this subject matter and as to its purported material import and further as not being in accord with the preponderant weight of the evidence. 105-106. Rejected as constituting legal argument and discussion. 107-109. Rejected as constituting legal argument and discussion and as contrary to the preponderant weight of the evidence. 110-111. Rejected as constituting legal argument and discussion. 112-113. Rejected as constituting legal argument and discussion and as contrary to the preponderant weight of the evidence. Rejected as constituting legal argument and discussion. Accepted but subordinate to the Hearing Officer's findings and not, in itself, material to the legal issue sub judice. Rejected as contrary to the preponderant weight of credible evidence. Rejected as not in itself material and as contrary to the preponderant weight of the credible evidence. Rejected as not in itself material and as contrary to the preponderant weight of the credible evidence and as constituting legal argument and discussion. 119-120. Rejected as subordinate to the Hearing Officer's findings on this subject matter and as to its purported material import and further as not being in accord with the preponderant weight of the evidence. COPIES FURNISHED: Robert D. Fingar, Esquire HUEY, GUILDAY, KUERSTEINER & TUCKER Regulation Suite 510 First Florida Bank Building Post Office Box 1794 Tallahassee, Florida 32302 Dale Twachtmann, Secretary Department of Environmental Blair 2600 Stone Road Tallahassee, Florida 32399. L. Caleen, Jr., Esquire OERTEL & HOFFMAN 2400 Blair Stone Road Tallahassee, Florida 32301 E. Gary Early, Esquire Department of Environmental Regulation 2600 Blair Stone Road Tallahassee, Florida 32399-2400
The Issue The issue in this case is whether Respondent, Ute Elisabeth Stork, committed the offenses alleged in an Administrative Complaint issued against her on January 26, 1999.
Findings Of Fact Petitioner, the Department of Business and Professional Regulation, Division of Real Estate (hereinafter referred to as the "Division"), is an agency of the State of Florida. The Division is charged with the responsibility for, among other things, regulating the practice of persons holding real estate brokers' and real estate salespersons' licenses in Florida. Section 20.165, and Chapters 455 and 475, Florida Statutes. Respondent, Ute Elisabeth Stork, is now, and at all times relevant to this matter has been, licensed as a real estate salesperson in Florida. On March 23, 1998, Ms. Stork passed the broker examination and became a real estate broker/salesperson. Ms. Stork holds license number 0646762. Between February 28, 1997, and February 10, 1998, Ms. Stork was registered with Petitioner as a salesperson employed by SWF Business Brokers, Inc., a registered brokerage corporation with offices in Fort Myers. On or about September 29, 1997, Ms. Stork began operating as a salesperson employed by FHIG Platinum Realty, a registered brokerage corporation trading as ERA Platinum and located in Naples. There was conflicting evidence on the issue of whether Ms. Stork severed her relationship with SWF Business Brokers prior to starting her employment with ERA Platinum. Michael Omerzu, her employing broker at SWF Business Brokers, testified that Ms. Stork continued as a nominal employee of his firm until February 10, 1998, when he fired her. Mr. Omerzu knew that Ms. Stork was also working for ERA Platinum, but he believed her role there was clerical and that any of Ms. Stork's real estate transactions would continue to go through his company. Mr. Omerzu conceded that Ms. Stork did not come into the office after September 29, 1997, but also stated that Ms. Stork did work on one project in his office after that date. Mr. Omerzu formally terminated Ms. Stork in February 1998, after learning of her involvement in the transaction that is the subject of this proceeding. Ms. Stork admitted that she did not notify Mr. Omerzu that she was quitting his employ, but contended that her actions would have given any reasonable person notice that she was no longer working at SWF Business Brokers. After September 29, 1997, she no longer came into the office, she attended no meetings, and she filed none of the bi-weekly reports expected of active employees at SWF Business Brokers. Ms. Stork offered a copy of a form 400.5, signed by her and dated September 29, 1997, indicating the change in brokers from SWF Business Brokers to ERA Platinum. However, the evidence established that the Division never received this document. Ms. Stork admitted that she did not send the form to the Division. She testified that she assumed the signing broker for ERA Platinum would see to it that the form reached Petitioner. After the investigation leading to this case commenced, Ms. Stork submitted a form 400.5 to the Division's investigator. Unlike the form she offered at the hearing, the form Ms. Stork sent to the investigator was not signed or dated. Ms. Stork's explanation of the disparity between the forms was confused and not credible. Ms. Stork's husband, Sven Jutz, was president and part owner of ERA Platinum. Mr. Jutz was not licensed to operate as a real estate broker in Florida. ERA Platinum employed licensed persons to perform the functions of brokers. Both Ms. Stork and Mr. Jutz are natives of Germany and have lived in the United States for about five years. At some point prior to December 1997, ERA Platinum purchased an advertisement in a German magazine, offering its services to Germans seeking to purchase businesses in the United States and to qualify for resident visas. Elke and Deiter Reichardt, a German couple visiting Florida and interested in moving to the state, called Ms. Stork in response to the advertisement. They met Ms. Stork at the ERA Platinum office in Naples. Ms. Reichardt testified that she believed Ms. Stork was the broker for ERA Platinum. Ms. Stork characterized her role as one of transaction broker. Ms. Stork first took the Reichardts to visit a computer business in Tampa. After the visit, all parties agreed that the Reichardts' proficiency in English was probably not sufficient for the day-to-day operation of a business involving a great deal of personal customer contact. Ms. Stork next showed the Reichardts a business called Club Nautico, a Captiva Island boat rental business owned by Aquavestments, Inc. Ms. Stork believed that the Reichardts would be capable of dealing with tourists, and testified that Club Nautico was an established business with a good track record. Ms. Stork and the Reichardts visited Club Nautico, and the couple decided to make an offer on the business. Ms. Stork prepared a contract for the sale and purchase of the business. The contract named "D.E.C. Boat Rental, Inc." as the purchaser of the business. D.E.C. Boat Rental was formed on the advice of Ms. Stork and Mr. Jutz. They persuaded the Reichardts that it would be easier for German citizens to purchase an American business through a corporation. Mr. Jutz hired a law firm to prepare the corporate documents, listing Mr. Jutz as the sole director and officer of D.E.C. Boat Rental. The Reichardts were not mentioned in the corporate documents. Mr. Jutz also offered to run the boat rental business for the Reichardts pursuant to a management contract. The Reichardts rejected this offer. The contract was signed by Ms. Reichardt on behalf of D.E.C. Boat Rental, though she was not a named officer or director of the corporation. The contract provided that the buyer would make a $1,000 earnest money deposit at the time of signing on December 11, 1997, and would make an additional deposit of $23,000 toward the purchase price five days after the seller's acceptance of the offer. The contract provided that all deposits would be held by "Don Ross, Att." Mr. Jutz testified that Don Ross was a lawyer who had offices in the same building as ERA Platinum. Mr. Jutz stated that he had used Mr. Ross as escrow agent and closing attorney on one deal, and "it was not fun." Mr. Jutz testified that he had not yet severed relations with Mr. Ross at the time of the D.E.C. Boat Rental contract, so ERA Platinum continued to list him as the escrow agent. Mr. Ross did not testify. Ms. Reichardt testified that Ms. Stork told her that Don Ross was the escrow agent, and that Ms. Stork instructed her to make out the $1,000 earnest money check to "Don Ross, Escrow." Ms. Reichardt made out such a check on December 11, 1997, and handed the check to Ms. Stork. Both Ms. Stork and Mr. Jutz testified that the check ultimately ended up in the hands of Mr. Jutz, who handled all the money for ERA Platinum. The check was deposited at First Union Bank. The check was endorsed by "ERA Platinum Realty, Inc.," but Mr. Jutz testified this was the escrow account set up by Don Ross for his company. Mr. Jutz stated that he deposited the check into the account. On or about December 24, 1997, Ms. Reichardt sent a second check from Germany to Ms. Stork. This check was in the amount of $23,000, and was made out to "Escrow Agent." Ms. Reichardt testified that Ms. Stork instructed her to make the check payable to "Escrow Agent." This check was endorsed by "Within Named Payee" and deposited into ERA Platinum's escrow account at Barnett Bank. It was undisputed that this Barnett Bank account had no connection whatever with Don Ross. The contract between D.E.C. Boat Rental and Aquavestments did not close. Ms. Reichardt testified that the seller held out for more money, and was concerned about the Reichardts' ability to pay. Ms. Reichardt also stated that she and her husband became concerned with Mr. Jutz' machinations, and contacted an attorney, Ernest Seemann, who advised them not to go through with the deal. Mr. Seemann is a native of Germany who has practiced law in Florida for 20 years. He testified that Ms. Reichardt came to see him with the D.E.C. Boat Rentals contract and sought his advice. He reviewed the contract, then researched the corporate records and learned that the Reichardts were not shown on the corporate records of the company formed by Mr. Jutz to purchase the business. Mr. Seemann advised the Reichardts not to complete the deal because D.E.C. Boat Rentals was not in their name. Mr. Seemann testified that he also contacted Don Ross, who told him he had nothing to do with this contract and had received no money to hold in escrow. This testimony was corroborated by Mr. Jutz, who conceded that Don Ross did not personally participate in this transaction. His suspicions aroused, Mr. Seemann investigated further and found confusion as to the identity of the broker for whom Ms. Stork was working. After the exchange of many letters and phone calls, he finally received a letter from Mr. Omerzu acknowledging that Ms. Stork was a sales agent in his office, but that Mr. Omerzu knew nothing about Ms. Stork's dealings with the Reichardts or the whereabouts of their deposit money. As noted above, Ms. Stork claimed that she had already severed her relationship with Mr. Omerzu at the time of the D.E.C. Boat Rental transaction. Mr. Seemann then began attempting to track down the whereabouts of the Reichardts' money. He contacted Charles Carney, a broker for ERA Platinum, but learned that he had left the company before this transaction commenced. Mr. Seemann then contacted Harold Shireman, the successor broker to Mr. Carney at ERA Platinum. Mr. Shireman knew nothing about the Reichardts' money. Mr. Shireman testified that he left ERA Platinum shortly after this incident, partly because he was uncomfortable at being "kept in the dark" about transactions for which he was the nominal broker. Mr. Seemann ultimately discovered that the Reichardts' $23,000 deposit was being held in an ERA Platinum escrow account, and that Mr. Jutz had sole signatory authority over that account. He requested that Mr. Jutz transfer the money to Mr. Seemann's trust account, but Mr. Jutz refused. The Reichardts ultimately purchased the business from Aquavestments pursuant to a second contract entered on or about February 27, 1998. Mr. Seemann formed a corporation, Sea Wave Boat Rentals, Inc., for the Reichardts' purchase. The Reichardts are the directors of Sea Wave Boat Rentals. This contract provided that the $1,000 earnest money deposit and the $23,000 additional deposit would be held in escrow by "ERA Platinum Realty, Inc., Harold Shireman, Broker." As noted above, Mr. Shireman was not involved in the transaction, had no knowledge of the deposit money, and had no ability to draw on the ERA Platinum escrow account. The contract provided that all funds would be disbursed by the closing agent in accordance with the closing statement, and that any dispute regarding escrow funds would be referred by the broker to the Florida Real Estate Commission. Mr. Jutz and Ms. Stork refused to attend the closing or to turn over the $24,000 of the Reichardts' money they were holding. To conclude the closing, the Reichardts were forced to pay an additional $14,000 to the listing broker in exchange for the listing broker's assignment of rights to the money being held by Mr. Jutz and Ms. Stork. Mr. Jutz ultimately returned $9,750 to the Reichardts. He retained $14,250 as the commission for his firm's role as the buyer's broker.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by Petitioner finding that Respondent has violated Sections 475.215(2), 475.25(1)(b), 475.25(1)(d)1, 475.25(1)(e) and 475.42(1)(b), Florida Statutes, as alleged in the Administrative Complaint issued against Respondent, and that Respondent's real estate license be revoked. DONE AND ENTERED this 18th day of October, 2000, in Tallahassee, Leon County, Florida. LAWRENCE P. STEVENSON Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 18th day of October, 2000. COPIES FURNISHED: Steven W. Johnson, Esquire Steven W. Johnson, P.A. 1801 East Colonial Drive, Suite 101 Orlando, Florida 32803 Daniel Villazon, Esquire Department of Business and Professional Regulation Hurston North Tower, Suite N-308 400 West Robinson Street Orlando, Florida 32801-1772 Herbert R. Fisher, Chairperson Florida Real Estate Commission Department of Business and Professional Regulation 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802-1900 Barbara D. Auger, General Counsel Department of Business and Professional Regulation Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-0792
Findings Of Fact Since 1984, the Department has been the state agency charged with the responsibility to establish rules and regulate underground pollutant storage facilities in Florida. In 1988, the Legislature added the administration of the newly enacted Florida Petroleum Liability and Restoration Program to the Department's duties. The program was to be established on or before January 1, 1989. The Applicant is the owner of a petroleum storage system in Jacksonville, Florida. Since 1984, it has been subject to the rules regarding underground pollutant storage facilities promulgated by the Department. On September 18, 1989, an odor indicative of possible petroleum contamination was discovered at the site during the installation of monitoring wells. A Discharge Notification Form was sent to the Department by the Applicant on October 23, 1989. The form advised that there were no leaks in the system. It was suggested that the odor may have resulted from surface spill at the site over a number of years. In response to the notification, an inspection of the site was completed by the Department on December 5, 1989. The inspection revealed the following on-site violations: Registration requirements were not being met. The forms had not been updated to include the presence of monitoring wells and overfill protection at the facility. Two underground tanks had not been properly abandoned. Inventory and reconciliation records had not been properly maintained, as required by rule since 1987. This violation was reviewed, and discussed in detail with on-site representatives of the Applicant. The monitoring wells were not installed by the time deadlines set forth in the Department's rules regarding stationary tanks. Since the wells were installed in September 1989, samples had not been taken for visual signs of petroleum contamination. The purpose of the system is to allow the owner of the storage tanks to learn if there is a leak in the tanks that can be quickly controlled to limit contamination. The day after the inspection, the Applicant applied for a determination of eligibility for participation in the restoration coverage portion of the new Florida Petroleum Liability Insurance and Liability Program. An affidavit was signed stating that all of the Department's rules regarding stationary tanks were being complied with by the Applicant. Six days after the inspection, the Department sent the Applicant written notice of the results of the inspection. The Applicant was given time frames and instructions for correcting the listed violations that could be corrected. A contamination assessment and clean up were also required in the letter. This letter did not address the issue of eligibility for the restoration funding program because that was a matter unrelated to the inspection results. On March 7, 1990, the Department determined the facility was ineligible for participation in the restoration funding provided by the Florida Petroleum Liability and Coverage Program. The following reasons were given: Failure to properly abandon underground storage tanks, pursuant to Section 17-61.050(3)(c), Florida Administrative Code. Failure to maintain inventory records, reconciliations, and significant loss/gain investigation as per Section 17-61.050(4)(c), Florida Administrative Code. Failure to install monitoring system and overfill protection by the dates set forth in Section 17-61.06(2)(c)2, Florida Administrative Code. Failure to properly monitor leak detection system, pursuant to Section 17-61.050(5)(c), Florida Administrative Code. The 10,000 gallon fuel oil tank and the 3,000 gallon waste oil tank present at the facility were abandoned in March 1990. The notice issued by the Department after its inspection in December 1989, gave the Applicant sixty days after receipt of the notice to properly abandon the tanks. The Applicant substantially complied with this requirement after the written notice was received. Although the Applicant failed to maintain the inventory records, reconciliations, and significant loss/gain investigations required by the Department rules, some of these violations had been corrected prior to the Department's inspection in December 1989. Correct inventory recordkeeping was discussed during the inspection, and the need to immediately implement the proper recordkeeping practices was emphasized in the post-inspection notice of violations. All of the recordkeeping violations were not cured until August 1990. The records kept by the Applicant during the noncompliance period from 1984 to August 1990, did not provide a substantially equivalent degree of information regarding possible leak detection or prohibited discharges as the required recordkeeping procedures. Two underground stationary storage tanks on the site have been part of the Applicant's petroleum storage system since 1970 and 1975, respectively. The monitoring wells and overfill protection for these tanks should have been in place by December 31, 1987. Neither monitoring system was installed until September 1989. The Applicant began the contract negotiations for installation in September 1988. The Applicant did not demonstrate that the facility contained an alternative procedure between December 31, 1987 and September 1989, that provided a substantially equivalent degree of protection for the lands, surface waters, or groundwaters of the state as the established requirement for monitoring wells and overfill protection. In December 1989, the Department's notice advised the Applicant that the monitoring wells should be sampled monthly for visual signs of petroleum contamination. Since April 1990, the Applicant has been completing the monthly sampling in the monitoring wells as part of its leak detection system, as required by the Department's rule regarding underground stationary tanks.
Recommendation Accordingly, it is RECOMMENDED: That the Department enter a Final Order denying Petitioner's application for restoration coverage in the Florida Petroleum Liability and Restoration Program at the Jacksonville location. DONE and ENTERED this 28 day of December, 1990, in Tallahassee, Leon County, Florida. VERONICA E. DONNELLY Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904)488-9675 Filed with the Clerk of the Division of Administrative Hearings this _28_ day of December, 1990. APPENDIX TO RECOMMENDED ORDER The proposed findings of fact submitted by Petitioner are addressed as follows: Rejected. Improper interpretation of law. As for the facts in the first sentence, they are accepted. See HO #8. Rejected. Irrelevant. See HO #9. Rejected. Contrary to fact. See HO #9 and #11. Rejected. Contract to fact. See HO #11. Rejected. Contrary to fact. See HO #12 and #13. Rejected. Contrary to fact. Improper shifting of duty ad legal responsibility. Rejected . Improper application of law. The Respondent's proposed findings of fact are addressed as follows: Accepted. Accepted. Accepted. Accepted. See HO #8. Accepted. See HO #8. Accepted. See HO #3. Accepted. See HO #3. Accepted. See HO #3. Accepted. See HO #5. Accepted. Accepted. See HO #4. Accepted. See HO #4. Accepted. Accepted. See HO #6. Accepted. See HO #4 and #6. Accepted. See HO #4 and #6. Accepted. Accepted. Accepted. See HO #4 and #9. Accepted. Accepted. See HO #4 and #9. Accepted. Accepted. See HO #9. Accepted. See HO #4 and #10. Accepted. Rejected. Contrary to fact. See HO #10. Accepted. Accepted. Accepted. See HO #10. Accepted. See HO #3 and #12. Accepted. Accepted. See HO #13. Accepted. Accepted. See HO #6. Accepted. See HO #4 and #6. Accepted. See HO #6. Accepted. Rejected. Not established by evidence. See HO #6. Accepted. Accepted. Accepted. Accepted. See HO #7. Accepted. Accepted. COPIES FURNISHED: William Chadeayne, Qualified Representative 8933 Western Way, Suite 16 Jacksonville, Florida 32256 Janet E. Bowman, Esquire Assistant General Counsel Department of Environmental Regulation 2600 Blairstone Road Tallahassee, Florida 32399-2400 Dale H. Twachtmann, Secretary Department of Environmental Regulation 2600 Blairstone Road Tallahassee, Florida 32399-2400 Daniel H. Thompson, Esquire General Counsel Department of Environmental Regulation 2600 Blairstone Road Tallahassee, Florida 32399-2400
The Issue Whether Daniels Chevrolet, Inc., is a successor dealer within the meaning of section 320.642, Florida Statutes (2010),1/ and whether Daniels Chevrolet, Inc., and General Motors, LLC, are in compliance with the requirements of section 320.645.
Findings Of Fact Petitioners and Respondents stipulate to the following facts as set forth in this paragraph: Petitioners, Ferman Chevrolet and Gordon Chevrolet, are licensed motor vehicle dealers in Tampa, Florida, and are authorized to sell and service Chevrolet motor vehicles. GM is a licensed manufacturer and distributor of Chevrolet motor vehicles. GM owns 81.9 percent of Daniels Chevrolet. Roland C. Daniels (Mr. Daniels) is an African- American and owns 18.1 percent of Daniels Chevrolet. University Chevrolet was previously licensed as a motor vehicle dealer at 11300 North Florida Avenue, Tampa, Florida (Florida Avenue Location), and was authorized to sell and service Chevrolet motor vehicles. On April 19, 2010, University Chevrolet filed articles of dissolution with the Florida Department of State, stating "the date of dissolution: April 6, 2010." On May 12, 2010, the Dealer Sales and Service agreements between University Chevrolet and GM were terminated. On June 30, 2010, University Chevrolet submitted a Voluntary Relinquishment of License form to the Department. On July 1, 2010, the Department entered a Final Order cancelling University Chevrolet's motor vehicle dealer license, effective July 2, 2011. On April 27, 2011, GM sent a letter to the Department giving notice that GM was approving the appointment of Daniels Chevrolet, Inc., d/b/a Summit Chevrolet, as a Chevrolet dealer at the Florida Avenue Location and that the dealership was exempt from notice and protest pursuant to section 320.642(5)(a)1. On May 4, 2011, counsel for Petitioners sent a letter to the Department asserting, among other things, that the establishment of Daniels Chevrolet was not exempt and that Petitioners were entitled to notice and an opportunity to protest. The Department treated the May 4, 2011, letter as a request for administrative hearing and forwarded the letter to the Division of Administrative Hearings, where the matter was assigned DOAH Case Nos. 11-2273 and 11-2274. On June 22, 2011, Administrative Law Judge William Quattlebaum entered an Order Granting Motion to Relinquish Jurisdiction and Closing Files on the basis that there was no dispute as to any material facts. On May 24, 2011, GM sent a letter to the Department substantially identical to its April 27, 2011, letter, but changing the proposed "d/b/a" to "Daniels Chevrolet." On May 24, 2011, the Department accepted the license application filed by Daniels Chevrolet. On June 1, 2011, the Department determined that Daniels Chevrolet's license application was complete. On June 27, 2011, Petitioners filed an Amended Petition with the Department, which was forwarded to the Division of Administrative Hearings and is the present petition in this case. University Chevrolet, during all times relevant hereto, operated as a Florida limited liability company. By correspondence dated May 24, 2010, University Chevrolet was advised by GM that as of that date, all of the conditions described in the wind-down agreement between GM and University Chevrolet had been satisfied. As part of the process associated with University Chevrolet's petition to voluntarily relinquish its motor vehicle dealer's license, the dealership represented to the Department that: (1) all electronic filing system transactions were finalized at the tag office; (2) there were no outstanding consumer complaints; (3) there were no outstanding sales transactions; (4) there were no pending title and registration applications pending at the dealership or tag office; (5) there were no unsatisfied vehicle liens on trade-in vehicles; and (6) there was no remaining vehicle inventory as of June 21, 2010 (six critical tasks). Had University Chevrolet not completed these six critical tasks to the satisfaction of the Department, its petition seeking to relinquish its license would have been denied. On May 13, 2011, Mr. Daniels, on behalf of Daniels Chevrolet, attempted to file with the Department an application for a license as a motor vehicle dealer. Acceptance of the application was initially refused by the Department, in part, because of the May 4, 2011, protest letter filed with the Department by Petitioners' counsel. Prior to May 5, 2011, the date upon which Mr. Daniels received a copy of Petitioners' May 4, 2011, protest letter, Daniels Chevrolet hired a general sales manager and service director to assist with dealership operations. Additionally, in anticipation of opening for business by June 15, 2011, Daniels Chevrolet, prior to May 5, 2011, interviewed and selected a general contractor. The basic plan for getting Daniels Chevrolet operational by June 15, 2011, included engaging in cosmetic remodeling activities that could be completed within the timeframe of about a month. The operational plan provided that the portions of the dealership that customers would interact with the most and that did not require the issuance of any building permits (e.g., painting), would be front-loaded in the remodeling process so as to accommodate the June 15, 2011, targeted opening date. The initial cost to capitalize the operation of Daniels Chevrolet is $2,761,800.00. In order to fund the capital requirements, Mr. Daniels has invested $500,000.00 in Daniels Chevrolet, which represents an initial ownership interest of 18.1 percent. Motors Holding, an entity within GM, has invested $2,261,800.00, which represents initial ownership interests in Daniels Chevrolet of 81.9 percent. For his initial investment, Mr. Daniels received 5,000 shares of common stock from Daniels Chevrolet. For its initial investment, Motors Holding received 22,618 shares of preferred stock from Daniels Chevrolet. As to the issue of stock dividends and the redemption by Mr. Daniels of the preferred stock held by Motors Holding, the terms of the agreement between the parties provide as follows: Each quarter, [Daniels Chevrolet] will pay out dividends and redeem preferred stock if earnings are available for that purpose (that is, if earnings are not needed to make up prior losses). Generally, the amount available to pay dividends will be one half of [Daniels Chevrolet's] net after-tax earnings for the quarter. [Daniels Chevrolet] will pay dividends only on its preferred stock, and the amount of the dividend will be a pro rata share of the amount available for dividends. All remaining after-tax earnings are available to redeem shares of preferred stock at a price of $100 per share, increasing [Mr. Daniel's] ownership of [Daniels Chevrolet]. There are no dividends paid on the common stock. When [Daniels Chevrolet] has used its operating earnings to reduce the preferred stock held by Motors Holding to 20% of the originally issued preferred shares, it is required to redeem the remaining preferred shares at a price of $100 per share, using any available source of funds. At this time, the Motors Holding representatives will resign from the board of directors and the company will be owned solely by [Mr. Daniels]. The agreement between Mr. Daniels and GM also allows for the expedited purchase of the dealership pursuant to the following contractual terms: Notwithstanding any other terms or conditions of the Investment Agreements or any terms or conditions in the GM memorandum dated August 12, 2004, and March 1, 2005, respecting early buyout parameters, Operator [Mr. Daniels] is not precluded from an expedited purchase of the preferred shares using a monetary source other than profits from the dealership's operation. Operator may purchase GM's shares of preferred stock of the Dealer Company [Daniels Chevrolet] using any legal source of funds at any time within ten (10) years after the date that the dealership opens for business with the public, regardless of the percentage of preferred stock that has been redeemed. The agreement between Mr. Daniels and GM also provides as follows: Candidate/Operator understands that the performance and profitability of the dealership will be affected by not only the Operator's performance, but also by factors outside the control of the dealership, including without limitation, general and local economic conditions, industry auto sales, General Motors' auto sales, and any and all types of risks affecting businesses of the relevant size and type. As with any entrepreneurial activity, Candidate/Operator's and GM's investments in the proposed business forecasted here are at risk. Candidate/Operator acknowledges and understands the potential that he or she could lose some or all of Candidate/Operator's investment if he or she invests in an unprofitable dealership. Candidate/Operator acknowledges and agrees that GM shall have no obligation to provide compensation, payment or reimbursement for any losses, and Candidate/Operator shall have no right to reimbursement for any losses. The revenue projections for Daniels Chevrolet show that during the first year of operations, the dealership is estimating that it will sustain a loss, before deducting for any bonus and taxes, of $130,800.00. In the second year of operations, Daniels Chevrolet is projecting, before deducting for any bonus and taxes, that it will earn a net profit of $110,370.00. In operational years three through ten, Daniels Chevrolet is projecting an average annual net profit, before deducting for any bonus and taxes, of $1,294,050.00. Based upon these projections, the preferred stock owned by Motors Holding will be redeemed in approximately 6.25 years. Prior to joining the automobile industry, Mr. Daniels worked in a managerial capacity for the Sears Corporation for approximately 17 years. At one point during his career with the Sears Corporation, Mr. Daniels became a national buyer for women's apparel. As a national buyer, Mr. Daniels was responsible for forecasting the women's apparel needs for some 750 stores throughout the United States of America. After leaving the Sears Corporation, Mr. Daniels became involved with the automobile industry in 1985, when he entered GM's dealer development program. After successfully completing the dealer development program, Mr. Daniels, in 1987, became part owner of an automobile dealership in Colorado. The Colorado dealership ceased operations sometime around the latter part of 1988. In 1991, Mr. Daniels relocated to South Florida where for a period of about five years, he worked as general manager for two Saturn dealerships. In his capacity as general manager, Mr. Daniels was involved in managing vehicle inventory issues and developing forecasts regarding future vehicle sales. Subsequently, Mr. Daniels left South Florida and moved to Gainesville, Florida, where he owned and operated a Saturn dealership for more than ten years. When GM ceased manufacturing the Saturn line of vehicles, Mr. Daniels switched to selling Mitsubishi vehicles until such time as he sold his dealership around March 2011. Mr. Daniels, through training and experience, is skilled at making forecasts regarding the future sales of automobiles. In support of its revenue forecast, Daniels Chevrolet, relying upon the experience of Mr. Daniels and GM, projects that during its first year of operations, it will sell 500 new vehicles. For the second year of operations, Daniels Chevrolet is projecting 600 new vehicle sales. For the remaining relevant operational period, Daniels Chevrolet is projecting that it will average 850 new vehicle sales per year. The number of vehicles sold by Daniels Chevrolet will not reduce the number of new vehicles allocated to Petitioners by GM. What is generically referred to as "additions and deductions" provides another source from which Daniels Chevrolet expects to generate income. Income from additions and deductions can be derived from sources such as insurance recoveries, factory incentive money, and tax adjustments. During its first year of operations, Daniels Chevrolet is projecting $400,000.00 in income from additions and deductions. In its second year of operations, Daniels Chevrolet is projecting that the amount of income derived from additions and deductions will be $851,000.00. Commencing with its third year of operations, Daniels Chevrolet is projecting that its annual average for income derived from additions and deductions will be $1,099,000.00. For the period January 2001 through November 2009, dealers that occupied the Florida Avenue Location had annual new vehicle sales, not including fleet vehicles, as follows: Year 2001 – 890 vehicles Year 2002 – 863 vehicles Year 2003 – 921 vehicles Year 2004 – 915 vehicles Year 2005 – 977 vehicles Year 2006 – 698 vehicles Year 2007 – 674 vehicles Year 2008 – 367 vehicles 1/2009 - 11/2009 – 348 vehicles Mr. Dennis Slater, from 2005 through approximately April 2010, oversaw business operations and served as either chief financial officer or executive manager for University Chevrolet. During this period, Mr. Slater became very familiar with University Chevrolet's day-to-day business operations, as well as the conditions of the market in which University Chevrolet competed. According to Mr. Slater, for the period October 2006 through December 2008, the dealer/operator in charge of University Chevrolet encountered significant self- imposed challenges that compromised the dealer/operator's ability to successfully manage dealership operations. Those challenges eventually lead to Mr. Slater taking over the day-to-day operation of University Chevrolet in January 2009. After having been affiliated with University Chevrolet for approximately five years, and having worked in the auto industry for more than 35 years, Mr. Slater submitted a proposal to GM to operate the Florida Avenue Location as a successor to University Chevrolet. As a part of his proposal, Mr. Slater estimated that during his first year of operations he could sell 916 new vehicles. During his second year of operations, Mr. Slater projected that he could sell 1,119 new vehicles. Additionally, Mr. Slater projected that during his first year of operations, he would generate $718,998.00 in income from additions and deductions. Albert E. Parziale, CPA, CFF, CFE, Petitioners' expert, testified that in his opinion, Daniels Chevrolet would not be able to achieve profits sufficient to allow the dealership to obtain full ownership of the company within ten years of commencing operations. In reaching his conclusion, Mr. Parziale looked at new vehicle sales data in the aggregate for the Florida Avenue Location for the years 2001 through 2009. Mr. Parziale then "averaged" the data and determined that the Florida Avenue Location annually averaged 740 new vehicle sales during the period in question. Mr. Parziale also analyzed the new vehicle sales data for a narrower period of time (2006 through 2009) and found that the Florida Avenue Location during these later years annually averaged 521 new vehicle sales.2/ Mr. Parziale also noted that during the broader period between 2001 and 2009, previous operators at the Florida Avenue Location averaged $1,194,717 in income from additions and deductions, but it would be unreasonable for Respondent Daniels Chevrolet to rely on this income source to meet its buy-out obligation to Motors Holding because of the erratic nature of income flow derived from this source.3/ Currently, the average Chevrolet dealer in the Southeastern region of the United States, which includes Tampa, Florida, receives 1.1 million annually in net income from additions and deductions and the average Chevrolet dealer in the Tampa market receives $914,000.00 annually in net income from additions and deductions. Mr. Parziale acknowledges that it would not be unreasonable for Respondents to project that Daniels Chevrolet will average $1,099,000.00 in income from additions and deductions for the next ten years.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law set forth herein, it is RECOMMENDED that the Department of Highway Safety and Motor Vehicles, Division of Motor Vehicles, enter a final order granting Respondent, Daniels Chevrolet's, licensure application to operate as a successor motor vehicle dealer at 11300 North Florida Avenue, Tampa, Florida, and denying the relief sought by Petitioners, Ferman Chevrolet and Gordon Chevrolet, in their Amended Petition. DONE AND ENTERED this 1st day of December, 2011, in Tallahassee, Leon County, Florida. S LINZIE F. BOGAN Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 1st day of December, 2011.
Conclusions This matter came before the Department for entry of a Final Order upon submission of an Order Closing File and Relinquishing Jurisdiction by Jessica E. Varn, Administrative Law Judge of the Division of Administrative Hearings, pursuant to Petitioner’s Notice Of Withdrawal of Proposed Dealer Agreement from Consideration by Respondents and Motion to Dismiss as Moot, a copy of which is attached and incorporated by reference in this order. The Department hereby adopts the Order Closing File and Relinquishing Jurisdiction as its Final Order in this matter. Accordingly, it is hereby ORDERED that this case is CLOSED. DONE AND ORDERED this AY day of May, 2013, in Tallahassee, Leon County, Florida. Bureau of Issuance Oversight Division of Motorist Services Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room A338 Tallahassee, Florida 32399 Filed with the Clerk of the Division of Motorist Services this 4 day of May, 2013. NOTICE OF APPEAL RIGHTS Judicial review of this order may be had pursuant to section 120.68, Florida Statutes, in the District Court of Appeal for the First District, State of Florida, or in any other district court of appeal of this state in an appellate district where a party resides. In order to initiate such review, one copy of the notice of appeal must be filed with the Department and the other copy of the notice of appeal, together with the filing fee, must be filed with the court within thirty days of the filing date of this order as set out above, pursuant to Rules of Appellate Procedure. JB/jdc Copies furnished: Dean Bunch, Esquire Nelson, Mullins, Riley and Scarborough, LLP 3600 Maclay Boulevard South, Suite 202 Tallahassee, Florida 32312 dean.bunch@nelsonmullins.com John W. Forehand, Esquire South Motors Automotive Group 16165 South Dixie Highway Miami, Florida 33157 john.forehand@southmotors.net David Seymour Leibowitz, Esquire Braman Management Association 2060 Biscayne Boulevard, 2"! Floor Miami, Florida 33137 davidl|@bramanmanagement.com Richard N. Sox, Esquire Bass Sox Mercer, P.A. 2822 Remington Green Circle Tallahassee, Florida 32308 rsox@dealerlawyer.com Jessica E. Varn Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 Nalini Vinayak Dealer License Administrator STATE OF FLORIDA DIVISION OF ADMINISTRATIVE HEARINGS BMW OF NORTH AMERICA, LLC, Petitioner, vs. SOUTH MOTOR COMPANY OF DADE COUNTY, d/b/a SOUTH MOTORS BMW, Respondent. BMW OF NORTH AMERICA, LLC, Petitioner, vs. POMPANO IMPORTS, INC., Respondent. BMW OF NORTH AMERICA, LLC, Petitioner, vs. POMPANO IMPORTS, INC., Respondent. a a aU OOOO ee Oe eee Case No. Case No. Case No. 12-3385 12-3386 12-3387 BMW OF NORTH AMERICA, LLC, Petitioner, vs. Case No. 12-3389 SARASOTA AUTOMOTIVE MANAGEMENT, LLC, d/b/a BMW OF SARASOTA BERT SMITH OLDSMOBILE, INC., d/b/a BERT SMITH INTERNATIONAL CAPITAL EUROCARS, INC., d/b/a CAPITAL BMW IMPORT CITY, INC., d/b/a QUALITY BMW REEVES IMPORT MOTORCARS, INC., Respondents. BMW OF NORTH AMERICA, LLC, _ Petitioner, vs. Case No. 12-3390 BRAMAN MOTORS, INC., d/b/a BRAMAN BMW PALM BEACH IMPORTS, INC., d/b/a BRAMAN MOTORCARS, Respondents. ORDER CLOSING FILES AND RELINQUISHING JURISDICTION This case came before the undersigned on the Petitioner's Notice of Withdrawal of Proposed Dealer Agreement from Consideration by Respondents and Motion to Dismiss as Moot, filed January 29, 2013, and the undersigned being fully advised, it is, therefore, ORDERED that: 1. The final hearing scheduled for May 13 through 17, 2013, is canceled. 2. The files of the Division of Administrative Hearings are closed. Jurisdiction is relinquished to the Department of Highway Safety and Motor Vehicles. DONE AND ORDERED this llth day of February, 2013, in Tallahassee, Leon County, Florida. aw JESSICA E. VARN Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 11th day of February, 2013. COPIES FURNISHED: Jennifer Clark, Agency Clerk Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room A-430 2900 Apalachee Parkway, Mail Stop 61 Tallahassee, Florida 32399 John W. Forehand, Esquire South Motors Automotive Group 16165 South Dixie Highway Miami, Florida 33157 john. forehand@southmotors.net Dean Bunch, Esquire Nelson, Mullins, Riley, and Scarborough LLP Suite 202 3600 Maclay Boulevard, South Tallahassee, Florida 32312 dean.bunch@nelsonmullins.com David Seymour Leibowitz, Esquire Braman Management Association 2nd Floor 2060 Biscayne Boulevard Miami, Florida 33137 davidl@bramanmanagement.com Richard N. Sox, Esquire Bass Sox Mercer, P.A. 2822 Remington Green Circle Tallahassee, Florida 32308 rsox@dealerlawyer.com STATE OF FLORIDA DIVISION OF ADMINISTRATIVE HEARINGS BMW OF NORTH AMERICA, LLC, Petitioner, v8. Case No. 12-3385 SOUTH MOTOR COMPANY OF DADE COUNTY, d/b/a SOUTH MOTORS BMW, Respondent. BMW OF NORTH AMERICA, LLC, Petitioner, vs. Case No. 12-3386 POMPANO IMPORTS, INC., d/b/a Vista BMW of Pompano Beach, Respondent. BMW OF NORTH AMERICA, LLC, Petitioner, vs. . Case No. 12-3387 POMPANO IMPORTS, INC., d/b/a Vista BMW of Coconut Creek, Respondent. Filed January 29, 2013 8:53 AM Division of Administrative Hearings BMW OF NORTH AMERICA, LLC, Petitioner, vs. SARASOTA AUTOMOTIVE MANAGEMENT, LLC, d/b/a BMW OF SARASOTA; BERT SMITH OLDSMOBILE, INC., d/b/a" BERT SMITH INTERNATIONAL; CAPITAL EUROCARS, INC., d/b/a CAPITAL BMW; IMPORT CITY, INC., d/b/a QUALITY BMW; and REEVES IMPORT MOTORCARS, INC., Respondents. BMW OF NORTH AMERICA, LLC, Petitioner, vs. BRAMAN MOTORS, INC., d/b/a BRAMAN BMV, and PALM BEACH IMPORTS, INC., d/b/a BRAMAN MOTORCARS, Respondents. Case No. 12-3389 Case No. 12-3390 NOTICE OF WITHDRAWAL OF PROPOSED DEALER AGREEMENT FROM CONSIDERATION BY RESPONDENTS AND MOTION TO DISMISS AS MOOT Comes now BMW of North America, LLC ("BMW NA") and notifies the Administrative Law Judge that it has withdrawn its notice to Respondents concerning the proposed dealer agreement which is the subject of this proceeding. withdrawal of notice, BMW NA moves to dismiss this matter as moot. motion, BMW NA states: As a result of this In support of its 1. On July 17, 2012, BMW NA notified Respondents of its intent to offer them the superseding/merged BMW Center Agreement for BMW passenger cars and BMW light trucks ("the Merged Agreement"), which was proposed to supersede, modify and replace the existing BMW Dealer Agreement for BMW passenger cars and the existing BMW SAV Center Agreement for BMW light trucks (collectively "the Existing Agreements"). 2. Respondents filed complaints with the Department of Highway Safety and Motor Vehicles ("DHSMV"), contesting the terms of the proposed Merged Agreement. These complaints were transferred by the DHSMV to the Division of Administrative Hearings. 3. On January 29, 2013, BMW NA, by letters attached hereto as Exhibit A, notified Respondents, as follows: BMW of North America, LLC ("BMW NA") hereby withdraws its notice, transmitted to you on July 17, 2012, with respect to the superseding/merged BMW Center Agreement (‘Agreement’) for BMW passenger cars and BMW light trucks. You and your successors may remain on your current forms of: dealer agreements: the BMW Dealer Agreement for BMW passenger cars (‘Old Agreement’) and the BMW SAV Center Agreement for BMW light trucks (‘SAV Center Agreement') or sign the Agreement which was offered to you, at any time in the future. 4. Inasmuch as BMW NA has withdrawn the July 17, 2012 notice that entitled Respondents to file their protests, and confirmed to Respondents that they and their successors', have the option to remain on the Existing Agreements unless, at any time in the future, they elect to sign the Merged Agreement, Respondents’ protests should now be dismissed as moot. ' Motor vehicle dealerships, and equity interests therein, are transferable to buyers as provided in Section 320.643, Florida Statutes. 3 Respectfully submitted, Lh. bL Dean Bunch dean.bunch@nelsonmullins.com C. Everett Boyd, Jr. everett. boyd@nelsonmullins.com Nelson Mullins Riley & Scarborough LLP 3600 Maclay Blvd., S., Suite 202 Tallahassee, FL 32312 Telephone: (850)907-2505 Attorneys for BMW of North America, LLC CERTIFICATE OF SERVICE I HEREBY CERTIFY that the forgoing was served by electronic transmission, this at day of January, 2013, upon the following: | Jennifer Clerk, Agency Clerk clark. jennifer@hsmv.state.fl.us Dept. of Highway Safety Neil Kirkman Bldg., Room A-430 2900 Apalachee Parkway, Mail Stop 61 Tallahassee, FL 32399 John W. Forehand, Esq. john. forehand@southmotors.net 16165 South Dixie Highway Miami, FL 33157 Richard N. Sox, Esq. rsox@dealerlawyer.com Nicholas A. Bader, Esq. nbader@dealerlawyer.com 2822 Remington Green Circle Tallahassee, FL 32308 David Leibowitz, Esq. davidl@bramanmanagement.com Timothy Grecsek, Esq. timothyg@bramanmanagement.com Braman Management Association 2060 Biscayne Bivd., Second Floor Miami, FL 33137 ~ Attorney
Findings Of Fact On July 31, 1986, Petitioner Chevrolet World, Inc. (hereinafter "Chevy World"), filed an application for licensure with the Department of Highway Safety and Motor Vehicles (hereinafter "Department"), seeking to become a licensed Chevrolet dealer in Orlando, Orange County, Florida. Chevy World is owned by Don Mealey, who also owns another Chevrolet dealership in Orlando known as Don Mealey Chevrolet, Inc. The new dealership would be located in a development known as "Lee Vista Center," immediately north of the Orlando International Airport. The Jacksonville Zone for the Chevrolet Division of General Motors (hereinafter "GM"), is divided by GM into MDAs (Multiple Dealer Areas) and SDAs (Single Dealer Areas). There are five MDAs in the Jacksonville Zone: West Palm Beach, Miami, Orlando, Jacksonville, and Tampa. The Orlando MDA consists of all of Orange and Seminole Counties plus two census tracts in the extreme southern portion of Volusia County which are immediately adjacent to Seminole County. There are four Chevrolet dealers currently operating within the boundaries of the Orlando MDA as established by GM: (a) Roger Holler Chevrolet in Winter Park, (b) Don Mealey Chevrolet in Orlando (owned by the owner of the applicant in this case), (c) Century Chevrolet (hereinafter "Century"), in Winter Garden, and (d) Ken Rummel Chevrolet in Sanford. Within each MDA, GM further subdivides the area into AGSSAs (areas of geographic sales and service advantage) and places one dealer in each AGSSA. GM designates five (5) AGSSAs for the Orlando MDA. The open point is located in AGSSA 5. Theoretically, each dealer is supposed to have the greatest opportunity for sales and service in his own AGSSA when compared to other Chevrolet dealers. Although GM lists only four Chevrolet dealers in the Orlando MDA, it is undisputed that more than those four dealers advertise in and serve the Orlando market area. For example, the Southern Bell telephone directory yellow pages for Orlando lists six Chevrolet dealers who advertise in Orlando, and this list does not include Ken Rummel's Chevrolet dealership, which GM does include in the Orlando market area. Additionally, John Larkin, the owner and president of Century and one who is familiar with the competition among dealers in Orlando, testified that there are ten Chevrolet dealerships which advertise in and serve the Orlando market. These include Bill Seidel Chevrolet in Clermont, Florida; Vanganoway Chevrolet in Eustis, Florida; Cecil Clark Chevrolet in Clermont, Florida; Fred Bonson Chevrolet in Deland, Florida; Ken Rummel Chevrolet in Sanford, Florida; Roger Holler Chevrolet in Winter Park, Florida; Don Mealey Chevrolet in Orlando, Florida; Burchfield Chevrolet in St. Cloud, Florida; Sterling Chevrolet in Kissimmee, Florida; and Century in Winter Garden, Florida. This evidence was not disputed by GM. Given this large number of dealers which impact the Orlando market, the market in Orlando for Chevrolet cars is highly competitive. The critical substantive question in this case is whether the existing dealers are adequately serving the market. A proper definition of the market is obviously important. GM failed to prove that its MDA properly defines the relevant market area for this proceeding. It offered no explanation as to why the relevant market is not the Orlando statistical metropolitan area which encompasses a three-county area: Seminole, Orange, and Osceola Counties. In fact, one of GM's own witnesses, Dr. Ronald Rubin, testified that the boundaries of the Orlando statistical metropolitan area would be appropriate parameters for the Orlando market area. Dr. Rubin could not state that the Orlando MDA accurately defines or describes the Orlando market or that AGSSA 5 would actually be the marketing area or community with respect to a new dealer located therein. Given the facts that GM offered no explanation other than its own discretion why its MDA should be smaller in area than the Orlando statistical metropolitan area and that many Chevrolet dealers outside the boundaries of GM's MDA have a significant impact on Chevrolet sales in Orlando, the relevant territory or community is the Orlando statistical metropolitan area and not only the Orlando MDA. The smaller artificially-configured market areas established by GM (Orlando MDA and AGSSA 5) are specifically rejected because they are only a portion of the market area impacted by the Chevrolet dealers in the Orlando statistical metropolitan area and because there was no competent showing by GM that the Orlando MDA and AGSSA 5 bear scrutiny. While an MDA or AGSSA might in an appropriate case be the proper area of scrutiny, GM has not carried its burden of proving that this is such an appropriate case. Because the relevant community or territory is the Orlando statistical metropolitan area, the sales performances and penetration rates for the Chevrolet dealers in Kissimmee, St. Cloud, Eustis, Deland, and Clermont, in addition to the four dealers located in the Orlando MDA, must all be considered in determining whether the existing dealers in the Orlando statistical metropolitan area are adequately representing Chevrolet in that market. GM presented no credible evidence as to the penetration rates in the Orlando statistical metropolitan area by all the dealers who compete there. Consequently, GM has not carried its burden of proving that the existing Chevrolet dealers are not providing adequate representation for GM in the relevant market area. GM's evidence that there were 552 new car in-sells within the Orlando MDA by outside Chevrolet dealers supports a conclusion that the MDA is not the real or relevant market; it does not prove the propositions for which it is cited--(a) that the Chevrolet dealers within the Orlando MDA are not adequately serving the market and/or (b) that the customers are or were dissatisfied with those dealers. There is no evidence in the record to support a conclusion that these 552 customers, or any one of them, were displeased with the Orlando MDA dealers; for example, there was no polling data or other information from those customers offered by GM which would have indicated such displeasure. The number of in-sells into the MDA is more likely the result of dealers within the metropolitan statistical area but outside GM's artificial MDA (e.g., the Chevrolet dealer in Kissimmee, Florida) competing with MDA dealers. Thus, the number of in-sells is probative of a conclusion that GM's artificially- drawn MDA boundaries are skewed and are not indicative of the relevant territory or community for purposes of this proceeding, thereby casting doubt on substantially all of GM's studies and conclusions that penetration rates in the Orlando market area are disproportionately low. Additionally, as proven by the uncontroverted testimony of Dr. Ostlund, the AGSSAs established by GM for the Orlando MDA were not drawn in accordance with GM's own established guidelines. First, AGSSAs are supposed to be determined by and drawn in accordance with natural and man-made barriers or boundaries; however, none of the AGSSAs in the Orlando MDA are divided by or established in accordance with natural or man- made boundaries or barriers. Second, the AGSSAs established by GM are supposed to account for and be established in accordance with shopping patterns; however, there is no analysis in the AGSSA documents for the Orlando MDA concerning non-automotive shopping patterns, and the information concerning automotive shopping patterns does not support the AGSSA lines drawn by GM. Third, contrary to GM's own guidelines, there is no evidence that any of the AGSSA boundaries have been drawn with the factor of traffic flow taken into account. Moreover, the evidence presented by GM clearly indicates that the statistical relationship between the residence of each dealer's customers and the AGSSA boundaries is weak. In other words, each dealer is located within an AGSSA and, according to GM's AGSSA guidelines, is expected primarily to impact the sales area within that AGSSA; however, the actual sales figures for each of the dealers reveal little if any correlation between the location of its customers and the AGSSA boundaries. Again, the appropriateness of the AGSSAs is contraindicated. An AGSSA could, of course, in an appropriate case be a submarket appropriate for scrutiny. The burden of showing the appropriateness is on GM. In a case such as this where GM not only fails to meet its burden but the evidence shows that GM's own standards for drawing AGSSAs have not been followed, it cannot be concluded that the use of any particular AGSSA suggested by GM is appropriate. Consequently, GM's calculations and conclusions, premised upon these AGSSAs, are not supported by credible evidence. Aside from this failure by GM to prove that it properly analyzed the relevant market area, GM failed to take other factors into account in assessing the adequacy of the existing dealers' representation. One of these factors was the closing of one of the four Orlando MDA dealers for most of 1985. From February 1, 1985 to November 1, 1985, Chevrolet was without a dealership in Sanford, Florida, because Ken Rummel was in the process of moving the Chevrolet dealership located there to a new location. While Mr. Anderson admitted that he was aware of Ken Rummel's closure and the probable negative effect this closure would have on market penetration efficiency, his studies did not account for this fact. As testified by Dr. Matthews, a primary flaw in GM's use of national penetration rates to conclude that inadequacy exists in the Orlando market is the lack of any comparative analysis of the different MDAs to determine whether factors peculiar to the Jacksonville Zone or the Orlando MDA are causing the alleged shortfall in penetration rates. The closure of Ken Rummel Chevrolet for most of 1985 illustrates that a comparative analysis of markets was not performed by Mr. Anderson or GM. The closure of one of the four Chevrolet dealers in the Orlando MDA for most of 1985 would have a significant negative impact on market penetration for that year, but GM apparently made no correction or adjustment in its analysis to take this important fact into account. Another factor which GM did not take into account before asserting that poor penetration efficiency of the Orlando MDA dealers indicated that an additional Chevrolet dealer was needed in the Orlando market is the extensive leasing of new Chevrolets which occurs in Orlando and the heavy sales of "brass- hat" cars by the Chevrolet dealers and current-model, low-mileage fleet cars by fleet rental companies. As defined by GM for sales and registration purposes, a fleet customer is any person or company who purchases ten or more cars or trucks of any brand anywhere in the country during a twelve-month time period. In 1985, 29.9 percent of industry car registrations in the Jacksonville Zone were fleet registrations. The national rate was 17 percent. For Chevrolet, 49 percent of all car registrations in the Jacksonville Zone in 1985 were fleet registrations, while nationally the rate for Chevrolet was only 21.8 percent. Stated differently, the dealers in the five MDAs in the Jacksonville Zone (3 percent of the total of all MDAs) accounted for over sixteen percent of all fleet sales in the United States. It is uncontroverted that the Orlando market has significantly higher levels of fleet sales than other parts of the country. GM has itself concluded that the extraordinary number of passenger car and truck fleet sales into the Orlando market area has a negative effect on passenger car and truck sales and registration effectiveness. In spite of this, none of the studies presented by GM took this into consideration. GM cannot properly do what it seeks to do here, that is, compare Orlando to national or regional or so called "typical" markets while admitting this difference without accounting for the impact of these fleet sales in the market. Additionally, many of these fleet companies who purchase new fleet cars from the dealers and manufacturers (e.g., Avis, Hertz, National, Budget, etc.) in turn sell those cars to consumers in the Orlando area. Typically, these rental cars sold by the large fleet companies are current-model, low- mileage cars, many of which are Chevrolets. Because there is no difference in the profile of a typical new car customer and a customer who will buy a current- model, low-mileage car from a fleet company, the sale of these fleet rental cars in Orlando diminishes the market demand for new retail Chevrolets. The reason for this deleterious effect on market demand for retail Chevrolets is that the current-model, low- mileage rental units can be sold by the rental companies for lower prices. This fact was admitted by Jacksonville Zone Manager Hall when he testified that sales of current model rental cars by rental companies has an adverse impact on new car sales. As further evidence that the heavy concentration of fleet sales by Chevrolet dealers and sales of current-model, low-mileage rental cars by fleet companies negatively affect new car retail penetration rates, Century introduced a letter from Don Mealey to R. J. Bresnahan (the former Jacksonville Zone Manager for Chevrolet) dated May 29, 1984. In this letter, Don Mealey, an existing dealer in the Orlando MDA and the owner of the applicant herein, delineated the problems of market penetration caused by fleet companies selling current-model, low-mileage rental cars. Mr. Mealey stated in his letter that prospective new car customers in Orlando have a "multitude of options available to them. They can shop a franchised new car dealer or they may choose from one of many outlets retailing low mileage, current models at a price considerably less than normal dealer invoice. The net effect of this second level system on the total market is incalculable." This observation by Mr. Mealey is consistent with GM's own admissions and the testimony of Century's officials during this hearing. Mr. Mealey further highlighted in his letter the large number of Chevrolet cars operating in Orlando which are registered elsewhere but which do not appear on the sales and registration reports for Orlando. "[C]ertain major rental companies purchase or lease Chevrolet's [sic] which are registered in Dade, Broward, or other Florida Counties. These vehicles are rented in Orlando, serviced in Orlando, and most often are sold in Orlando but do not appear as new vehicle sales or registrations. If these phantom units appeared on the R.L. Polk report, the overall Chevrolet market share would improve Again, Mr. Mealey's observations are consistent with other evidence adduced in this case. Despite these admissions by Petitioner GM and Mealey (an agent of Petitioner Chevy World), regarding fleet sales, Mr. Anderson denied that the large volume of fleet sales in the Orlando market has had a negative impact on the retail car penetration rates for Chevrolet dealers in the Orlando MDA. He offered no evidence in support of his conclusion. Mr. Anderson's position is unsupported by the facts in the record and belies common sense. Mr. Anderson's and GM's failure to properly account for and to factor into their analysis the impact of fleet sales on Chevrolet penetration rates discredits their contention that the present dealers are inadequately representing the market. Initial fleet sales impact retail penetration, as do resales of current model cars. Potential new car purchasers will generally not view current-model, low-mileage rental cars sold by fleet companies as distinguishable from new cars offered for sale by a Chevrolet dealer. Perceiving these two groups of automobiles as essentially similar, a customer in the new car market would ignore industry labelling differences between these groups of cars. In short, as established through GM's own witnesses, the Orlando market area, given its heavy concentration of fleet sales, is significantly different from the national market viewed as a whole. This heavy influx of fleet sales into the Orlando market area is strong evidence why penetration rates in the artificial Orlando MDA are lower than the national average. The typical customer is most interested in low prices. To attract these customers, Century advertises for sale "brass-hat" cars, which are vehicles used previously by GM officials and sold at GM auctions. There is no difference in the profile of a typical new car customer and a customer who will, and often does, buy a brass-hat vehicle. Brass-hat vehicles are purchased by Century at GM auctions to serve as price leaders in advertisements and sticker sales to encourage customers to visit Century's facilities. During 1986, Century sold an average of forty-three brass-hat vehicles per month, a large portion of which were Chevrolets. The local Chevrolet dealers in the Orlando market buy a large number of the brass-hat vehicles sold at the auctions conducted by GM in Orlando. Brass-hat vehicles, regardless of the model or mileage, are not treated as new cars by GM; thus, Chevrolet dealers, such as Century, do not get credit from GM for a new car sale when a customer purchases a brass-hat vehicle. Moreover, the Chevrolet dealers do not receive credit with respect to R. L. Polk registrations for the sale or registration of brass-hat vehicles. As is the case with current-model, low-mileage rental cars sold by fleet companies, it is unlikely that, if the physical attributes of the brass- hat vehicle are the same or substantially similar to the attributes of a new car, a potential customer will view those two classes of cars differently. Consequently, brass-hat vehicles are competitive with new retail cars in the marketplace and decrease the sales rates for the new cars because the brass-hat vehicles are priced lower. GM did not account for the significant levels of brass-hat vehicles sold in the Orlando market. No study was performed by GM to analyze what effects brass-hat sales had on new car sales effectiveness and penetration rates. Accordingly, GM's studies and conclusions are flawed insofar as they attempt to support a finding that the present Chevrolet dealers are providing inadequate representation in the Orlando market. Century and other Chevrolet dealers lease a large number of new cars. The leasing of new Chevrolets in Orlando diminishes the demand for the sales of new Chevrolets because the same profile of customers is involved, and at times leasing has financial advantages over purchasing. GM does not regard the lease of a new car as a retail sale. Again, Mr. Anderson's studies are flawed because they did not assess the negative effects which extensive leasing (as occurs in the Orlando market) has on penetration rates for new Chevrolet cars. In addition to the failure of GM to analyze the negative impact which Ken Rummel's closure in 1985 and the heavy concentration of leasing, fleet sales, brass-hat sales, and sales of current-model, low-mileage cars by fleet companies had on Chevrolet retail penetration rates in Orlando, the studies actually performed by GM were statistically and quantitatively suspect in many respects. Because the thrust of GM's proof focused on Mr. Anderson's five-point test, the five-point test must be analyzed in order to determine whether it is an accurate, reliable, and statistically proper analysis of the Orlando market, in general, and the adequacy of the existing dealers' representation, in particular. First, nearly every witness agreed that the mere fact that new car registrations in a particular market area fall short of national or Zone registration rates does not indicate, without further examination, that the existing dealers are not providing adequate representation in that market area. In determining whether the Orlando market is being adequately represented, Mr. Anderson testified that he would first ascertain whether the market penetration for Chevrolet in the Orlando MDA exceeded or fell below Zone and national retail penetration rates. Then, Mr. Anderson employs a five-point test to determine what is a reasonable level of market penetration for the particular market area. The first two steps in this five- point test entail a comparison of the demographic characteristics in terms of age and household income of the Orlando market area vis-a-vis the nation as a whole. The third step in the five- point test is an analysis of product popularity, i.e., an analysis which seeks to determine whether the particular line- make is popular in a certain market area. The fourth step is an assessment of the market to determine whether national or Zone penetration rates are being achieved or exceeded in certain defined areas within that market. Finally, the penetration rates for the areas surrounding the market in question are analyzed to determine whether national penetration rates are being achieved in these outlying areas. This five-point test for assessing local market penetration effectiveness is flawed in several respects and thus is an unreliable and inaccurate analysis. While GM did present demographic evidence that Orlando, compared to national statistics, was underrepresented in the 0-15 and 65-over age categories, there was no proof offered by GM that this population age data proved that Chevrolet sales potential was in any way enhanced. There were no Chevrolet customer age profiles submitted by GM, or any quantitative analyses performed by GM indicating that Chevrolet penetration rates varied in accordance with the age of the customers. Accordingly, GM's demographic evidence concerning age distributions in Orlando vis-a-vis the nation is statistically unpersuasive and proves nothing. The same finding is compelled with respect to the income levels in the Orlando market area. There was no evidence offered by GM that income levels relate in any way to Chevrolet retail penetration or can be analyzed as a determinant of interbrand competition. GM's use of product popularity statistics is not persuasive because it also failed to consider line-make popularity by model. Without such additional studies it cannot be accurately concluded that the Orlando market area can be compared, in a statistically acceptable manner, to the national market in terms of product popularity. The fourth factors analyzed by Mr. Anderson--whether certain census tracts within the Orlando MDA have retail Chevrolet penetration rates which meet or exceed the national average--is likewise a statistically unacceptable test for adequacy of representation or for the use-of national figures to demonstrate inadequacy. As established by the uncontroverted testimony of Drs. Ostlund and Matthews, this condition will undoubtedly exist in any market. Given the small total penetration numbers present in any census tract, it is not unrealistic to expect that some census tracts might have Chevrolet penetration rates which exceed a national average. Random penetration rates of one or two cars could mean the difference between exceeding or falling below national rates in a given census tract. Thus, the mere fact that one or more tracts have Chevrolet penetration rates above the national average does little to address the question whether there is adequate representation throughout a defined market area encompassing numerous census tracts. Stated otherwise, it would not be unusual to find census tracts in any defined market which exceed or fall below national penetration averages. Customers living in different census tracts are not homogeneous in terms of age, income, line- make preference, etc. Thus, the fact that there may be some census tract areas within a defined market area where penetration rates exceed some national penetration average is not a proper basis to infer that the entire market area should be able to achieve or exceed the same penetration rates. The fifth and final factor analyzed by Mr. Anderson and GM to support their assertion that the existing Chevrolet dealers in the artificial Orlando MDA are not providing adequate representation because they are not achieving national retail penetration rates is whether the market area outside the MDA but inside the Orlando metropolitan statistical area has higher penetration rates than the rates in the MDA. GM has concluded that higher penetration rates have been achieved in the areas outside the MDA boundaries. The inference which GM seeks to draw from this fact is that the Chevrolet dealers, located within the MDA, are not making adequate sales. The flaw in this argument is that such a shortfall will ordinarily (if not always) exist where the MDA is not coextensive with the SMSA, irrespective of whether the existing dealers within the MDA are adequately representing Chevrolet in the market. The reason for the discrepancy in the penetration rates is twofold. First, the SMSA is generally larger than the MDA and encompasses more rural and semi-rural areas. Historically, customers from rural or semi-rural areas have favored traditional domestic line-makes like Chevrolet over other line-makes. Second, import manufacturers do not have as extensive a dealer organization as traditional domestic manufacturers such as GM and have tended to concentrate their sales efforts in larger urban areas, thereby increasing the options of urban customers and decreasing the penetration rates for domestic line-makes such as Chevrolet. Consequently, the fact that Chevrolet may have achieved greater market penetration within the Orlando SMSA but outside the Orlando MDA proves little if anything about the adequacy of representation of Chevrolet by the existing dealers. In addition to the flaws existing in each of Mr. Anderson's five factors, the entire five-point test is significantly flawed and statistically unreliable. Curiously, this is not disputed by GM. The question of-the propriety of the five-point test arose as follows. Mr. Anderson testified first, saying not that this is a proper test but only that this is the test he used, admitting he knew of no authoritative text which supported its use. Drs. Ostlund and Matthews testified the test was inappropriate to judge the question presented. Mr. Anderson never denied this conclusion, and GM by offering no rebuttal evidence on this point and chose to leave the inappropriateness of the five-point test unrebutted. Thus, no conclusion can be reached except that it is inappropriate. Moreover, the test was not applied to the other Chevrolet MDAs in the United States to determine the accuracy and relevancy of the test. Neither in the five-point test nor in any of his other studies did Mr. Anderson address the quantity of dealer facilities that already exist in the Orlando market, a factor which is highly important on the adequacy-of representation issue. Finally, Mr. Anderson did not testify that he had used this test consistently in his testimony in other Florida cases before the Division of Administrative Hearings. To support its contention that an additional Chevrolet dealer is needed in Orlando, GM placed great emphasis on the fact that the population in Orlando had experienced significant growth over the years. However, the mere fact that Orlando has experienced a population growth is not evidence that an additional Chevrolet dealer is needed in the market, nor does it explain alleged low penetration rates. In fact, rapid growth in a market indicates that many people are moving to the market area. People who have recently arrived in the market area may have less desire to purchase a new car, or less income available for a new car purchase because of moving and new dwelling expenses. Nowhere in the testimony of, or the studies and reports prepared by, Mr. Anderson or any other GM witness is it indicated that this condition in the Orlando market was examined. Indeed, while Mr. Anderson testified that the Orlando area has experienced a high rate of migratory growth, he admitted that he did not analyze the question whether people who recently moved into the Orlando area would more or less likely be in the market for a new car. Moreover, the mere fact that population in the Orlando area has increased while the number of Chevrolet MDA dealers has remained the same (four) does not necessarily indicate the need for an additional dealer. Mr. Anderson's testimony was offered by GM to prove that the population growth in Orlando over the last fifty (50) years has been so large that four dealers can no longer adequately serve the increased number of customers. However, no analysis was conducted whether there exists a corresponding increase in sales and service facilities and operating investments. Moreover, an equally plausible inference to be drawn is that there were too many Chevrolet dealers in 1930. No analysis or study was performed by GM to account for this equally plausible inference. GM also presented evidence concerning the location of the existing dealers and the effectiveness of those dealers to attract customers residing at varying distances from the dealerships, seeking to prove that a dealer's market penetration success bears an inverse relationship with the distance a potential customer must drive to reach that dealership. However, GM's analysis is flawed in several respects. First, this analysis does not take into account the specific geographical location of a dealer in the Orlando market area, and particularly with respect to whether the dealer location is close to areas where few or no customers reside. For example, a dealer like Century is near farmland and a large lake, thereby reducing the possibility that cars will be sold to or registered by customers living in a geographical area closer to that dealership. Furthermore, all MDA dealers will be partial servants of a geographical area because there will always be other same line-make dealers serving that market. Thus, the analysis used by GM does not address the question whether the existing dealers are adequately serving the market. Finally, GM's position in this proceeding that the location of a dealership is not relevant leaves it little room to complain of locations. GM .offered no persuasive evidence that any traffic patterns or congestion in the Orlando market area indicated the need for an additional Chevrolet dealer. In fact, the evidence was to the contrary; there is no significant traffic congestion in the vicinity of the proposed new dealer point location to justify the addition of a dealer. In any event, traffic congestion is generally not an important factor in determining whether an additional dealership is needed in a market because traffic congestion usually occurs during rush hours; typically, potential customers do not shop for new cars during rush hour. GM presented evidence in the form of graphs and charts which allegedly established that the dealers in the Orlando MDA must service a higher number of potential customers than dealers in other Jacksonville Zone MDA's. The inference sought to be established by GM from this data is that there are too few Chevrolet dealers in the Orlando MDA to properly service the larger number of potential customers. However, GM's evidence does not support this inference. First, this analyis is fundamentally flawed because it is premised upon there being only four Chevrolet dealers in the Orlando market area; the evidence presented in this case establishes that ten Chevrolet dealers compete heavily in the Orlando area market. Second, the population/dealer data actually supports Century's position. According to Dr. Matthews' statistically correct computations, each dealer in the Orlando MDA services a population of 206,542; however, the average population serviced by the dealers in the entire Jacksonville Zone is 209,691. Consequently, the Orlando MDA dealers service less population than the average of the other Chevrolet dealers in the Jacksonville Zone. This fact obviously does not compel the conclusion that a new dealer is needed in the Orlando MDA; in fact, it is strong evidence that the present dealers are adequate in number to represent the Orlando market. Mr. Anderson's conclusions regarding registration rates per dealer in the Jacksonville Zone suffer from similar statistical flaws. After removing the Pensacola registration figures from this study and adjusting the Tampa MDA figures to accurately reflect the number of existing Chevrolet dealers, the average number of registrations per dealer point is 9,658. Thus, because the Orlando MDA Chevrolet dealers' registrations per dealer point (8,587) are below average Jacksonville Zone figures, this study also does not prove the need for an additional Chevrolet dealer in Orlando. If another Chevrolet dealer were added in Orlando, the number of registrations per dealer in the Orlando MDA would fall to 6,869, or only 72 percent of the average registrations per dealer in the Jacksonville Zone. Therefore, the studies performed by Mr. Anderson and GM reveal that an additional dealer in Orlando is contraindicated. In this proceeding, Mr. Anderson admitted that the total registrations for the Orlando MDA might vary by nearly twenty percent from the reported sales by the Orlando MDA Chevrolet dealers. Mr. Anderson conceded that this variation could have resulted from an error in R. L. Polk statistics. At no time has Mr. Anderson investigated to determine whether R. L. Polk actually used statistically proper and reliable procedures to gather and verify the registration data. Additionally, Anderson testified that he has personally found R. L. Polk data to be unreliable. Accordingly, the R. L. Polk registration reports and computations utilized by GM throughout its studies and reports have not been proven to be reliable. GM sought to establish that Chevrolet truck penetration rates in the Orlando MDA fell below national penetration rates. From this premise partially flowed GM's argument that an additional dealer was needed to increase Chevrolet penetration rates in the Orlando market area. However, as illustrated by Dr. Ostlund, the use of truck penetration statistics is not probative of inadequacy- of the existing dealers. Commercial customers of trucks, even those purchasing less than ten units per year (thereby not qualifying as a fleet customer by GM's standards) are a substantial portion of the truck market. Generally, these multi-unit, commercial truck customers are not concerned about the location of a dealer. Dr. Ostlund's testimony on this issue was not controverted by GM. The last full year from which GM evaluated sales and registration data was 1985, the year during which one Orlando MDA dealer was closed. GM only used nine-month data in 1986. However, GM's use of nine-month data for calendar year 1986 did not take into account any seasonal factors which could indicate that year-end sales figures would be significantly different. Proper statistical tools, such as regression analysis and exponential smoothing, could have been used to properly interpret the nine-month data and to extrapolate that data over a twelve-month time frame; however, no such commonly accepted statistical devices were used by Mr. Anderson or GM, thereby raising serious doubts as to the statistical accuracy of their conclusions. Moreover, no showing was made by GM that Mr. Anderson could provide competent testimony on such statistical techniques. Furthermore, it does not appear that Mr. Anderson or GM even considered the effect which any seasonal factors had on market penetration in 1986. There was no evidence offered by GM that seasonality patterns of Chevrolet sales were stable from year to year, particularly 1985 to 1986. Therefore, GM's failure to analyze seasonality factors renders unworthy its interpolation of 1985 data to determine annualized 1986 sales figures and penetration rates. In many of its comparative evaluations of the Orlando market and the Orlando dealers' sales and penetration effectiveness, GM utilized data obtained from the Pensacola MDA which is not a part of the Jacksonville Zone. However, it is clear that neither Mr. Anderson nor anyone else at GM performed any studies to determine whether the Pensacola market area was comparable to the Orlando market area or other multi-dealer markets in the Jacksonville Zone. The only justification for utilizing Pensacola MDA data was that Pensacola was in the State of Florida. Dr. Matthews, based on GM's own evidence, concluded that the inclusion of Pensacola in any of the studies was inappropriate. This was not disputed by GM. In the absence of any showing by GM that Pensacola is a comparable market to Orlando, any conclusions or inferences made by GM which in whole or in part are based upon Pensacola MDA data are unsound. GM offered no evidence that the sales and service facilities of the existing Chevrolet dealers in the Orlando market area are inadequate to represent Chevrolet in that market. In fact, Mr. Anderson admitted that he did not evaluate the sales and service facilities of any of the Orlando MDA Chevrolet dealers prior to concluding that they were not providing adequate representation. GM premised its entire case on a comparison between Chevrolet penetration rates in Orlando and Chevrolet penetration rates nationwide and in the Jacksonville Zone. The flaw in GM's presentation was the complete failure to determine whether the Orlando market is a typical market area from which conclusions as to low penetration rates and inadequacy of representation could be so simplistically drawn. More significantly, GM presented no evidence that other manufacturers, domestic or import, were achieving or exceeding their national or Zone penetration rates in the Orlando market. The absence of any evidence concerning penetration rates for other line-makes is particularly damaging to GM's contention that the Orlando area Chevrolet dealers should be achieving higher penetration rates. GM ranked each MDA in terms of market penetration for passenger cars and trucks. The Orlando MDA ranked 129 in passenger car sales penetration effectiveness and 130 in truck sales penetration effectiveness. The inference GM wishes to be drawn from these rankings is that the Chevrolet dealers in the Orlando MDA are ineffective in terms of market penetration and, thus, are not providing adequate representation for Chevrolet in Orlando. However, GM's rank-ordering of the 157 MDAs in the United States in terms of market penetration is statistically unsound because there is no explanation offered for the penetration discrepancies. There was no statistical analysis performed by Mr. Anderson to explain what factors exist in each of these markets, individually or collectively, to cause the penetration rate variations. The evidence is undisputed that there was no showing by GM that any of these markets were comparable, and, in fact, no adjustments were made for the lack of comparability. The placement of all Florida and California dealers in the bottom portion of the rankings suggests a comparability problem not addressed by GM. The evidence established that Century is not optimally located in the Orlando market area. Century is the only automobile dealership of any line-make in Winter Garden, Florida. All other dealerships, domestic and import, have gone out of business due to poor market demand. In order to attract customers in the Orlando market area, Century purchases advertisements in the Orlando Sentinel and on four Orlando television stations. All told, Century spent in excess of $1.1 million in 1986 on advertising. The amount spent on advertising per retail unit by Century was the highest of any dealers in Orlando and double the Zone average. This high degree of advertising was necessitated by depressed industries and low population figures in Century's assigned area of sales responsibility. Ultimately, there is no reason to disagree with the conclusion of GM's own evaluation done in the ordinary course of its business. As found by GM itself on its most recent evaluation of Orlando dealers, all dealers rated (Rummel was too new) were found to be doing an effective job with respect to car sales. Even accepting GM's MDA as the market, during the last full year, Orlando MDA car sales by Chevrolet were 14.1 percent of industry, which exceeded the Zone's rate of 11.9 percent significantly and was statistically indistinguishable from the national average of 14.35 percent. During the same year (1985) the so-called AGSSA 5 out-performed the MDA by posting a 21 percent share of total. In fact, total penetration by GM in AGSSA 5 during that year was better than in 3 of the 4 other AGSSAs. Chevrolet retail share in AGSSA 5 during the last full year for which statistics were presented was nearly the same as the Zone average of 11.5 percent. Because the evidence is uncontroverted that dealerships are not appropriately added solely based on truck penetration, (this being a small percentage of overall sales and numbers of dealers and location being relatively unimportant), GM's own evidence of better than adequate car sales by the Orlando MDA Chevrolet dealers for the last full year of dealership operations, along with GM's own admitted findings that all the Orlando MDA Chevrolet dealers were effective with respect to car sales during the 1985 ratings, compels the conclusion that GM's case was simply not proved.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is, therefore, A RECOMMENDED THAT a Final Order be entered denying the application of Chevrolet World, Inc., for licensure as a dealer of Chevrolet vehicles in Orlando, Florida. DONE and RECOMMENDED this 5th day of June, 1987, in Tallahassee, Florida. LINDA M RIGOT Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 5th day of June, 1987.
The Issue The issue in this case is whether Petitioner's site, Circle K General, Inc., Store #2375, located at U.S. #1 and Pennekamp Park, is eligible for restoration pursuant to the Florida Petroleum Liability and Restoration Program (FPLIRP) set forth in Section 376.3072, Florida Statutes.
Findings Of Fact Petitioner, Circle K General, Inc., Store #2375 owns and operates a petroleum storage site located at U.S. #1 and John Pennekamp Park, Key Largo, Florida. The DER Facility ID Number for the site is 448624728. Circle K operates at the site three 10,000 gallon fiberglass tanks which contain gasoline. The tanks currently operated at the site were installed in 1987. Four monitoring wells for the site were installed at the same time as the Circle K tanks were installed in 1987. Monthly monitoring well reports were completed each month beginning on December 12, 1987, and ending on July 30, 1989, by Professional Services Industries on behalf of Circle K. Steve Belin is the individual at Circle K responsible for reviewing or supervising the review of the monitoring well reports for Store #2375. The November 26, 1988, monthly monitoring well report indicated the presence of petroleum odor in all four of the monitoring wells at the site. After receipt of the November 26, 1988, monthly monitoring report, neither Steve Belin nor any employee of Circle K filed a Discharge Notification Form with the Department. After receipt of the November 26, 1988, monthly monitoring report, neither Steve Belin nor any employee of Circle K undertook steps to investigate the source or cause of the petroleum odor. The monthly monitoring report dated March 20, 1989, indicates the presence of a petroleum odor in one of the four monitoring wells. After receipt of the March 20, 1989, monitoring well report, neither Steve Belin nor any employee of Circle K filed a Discharge Notification Form with the Department. After receipt of the March 20, 1989, monthly monitoring report, neither Steve Belin nor any employee of Circle K undertook steps to investigate the source or cause of the petroleum odor. The July 30, 1989, monthly monitoring well report indicates the presence of petroleum product in all four monitoring wells. The July 30, 1989, monthly monitoring well report was not received by Steve Belin until September, 1989. On July 31 and August 1, 1989, Combustion Engineering installed a set of four new compliance monitoring wells. Circle K contracted for the installation of new monitoring wells because the four existing monitoring wells were only 15 feet deep and were dry. By letter dated August 17, 1989, Combustion Engineering notified Steve Belin that a petroleum odor was detected in the soils retrieved while drilling one of the new monitoring wells and that a petroleum odor was also detected in one of the old monitoring wells. On August 21, 1989, Steve Belin filed a Discharge Notification Form with the Department for Circle K Store #2375. After the discharge notification was filed on August 21, 1989, none of the tanks were taken out of service. After the filing of the August 21, 1989 Discharge Notification Form, Circle K inspected the inventory records for the site beginning in October, 1988, through September, 1989, and detected no significant loss of petroleum product. On October 6, 1989, an inspection of Circle K Store #2375 was conducted by Leslie Rueth of the South District Office of the Department of Environmental Regulation. At the time of the October 6, 1989, DER inspection, free product was noted in two of the four new monitoring wells, and all of the wells contained a petroleum odor. On October 19, 1989, the South District Office of Department of Environmental Regulation notified Steve Belin of the October 6, 1989, inspection results and requested (1) that a tank and line tightness test be performed to determine if there was a leak in the petroleum storage system and (2), if free product was present, that an initial remedial action (IRA) be implemented as defined in F.A.C. Rule 17-70.006. An Initial Remedial Action consists of the removal of free product through the bailing or pumping of free product off the water table and may include the removal of excessively contaminated soil. On October 30, 1989, Steve Belin submitted tank tightness test results for the three 10,000 gallon tanks located at Circle K Store #2375. All three tanks passed the tank and line tests. By letter of October 17, 1989, Steve Belin requested ATEC Associates, Inc. to have all of the monitoring wells of Store #2375 bailed of free product once a week for one month. The free product present at Store #2375 resulted from old tanks and piping installed by Circle K's predecessor, U Under Florida Administrative Code Rule 17 presence of a layer or odor, or the positive report of a laboratory that the monitoring well sample contains pollutant, shall be treated as a discharge. A properly installed monitoring well should have at least one foot of water in the well in order to be able to take a water sample from the well. If a foot or less of water is present in a monitoring well, a vapor monitoring device should be used to test the wells. From December, 1987, until July, 1989, the Circle K monitoring wells were usually dry. Under Florida Administrative Code Rule 17 wells must be constructed such that the bottom of the casing is at least five feet below the water level at the time of drilling but no deeper than 25 feet. The monitoring wells constructed at Circle K Store #2375 did not meet the construction specifications set forth in Chapter 17-61, Florida Administrative Code. Florida Administrative Code Rule 17-61.050(b)(6) requires discharges to be reported to the Department within three working days of discovery. DER was not notified of a discharge subsequent to either the November 26, 1988, or the March 20, 1989, monitoring well reports, nor did Circle K contain the leak.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department of Environmental Regulation enter a Final Order denying the Petitioner's application for site restoration pursuant to the Florida Petroleum Liability and Insurance Program (FPLIRP). DONE and ENTERED this 27th day of August, 1990, in Tallahassee, Florida. J. LAWRENCE JOHNSTON Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 27th day of August, 1990. APPENDIX TO RECOMMENDED ORDER, CASE NO. 90-2065 To comply with the requirements of Section 120.59(2), Florida Statutes (1989), the following rulings are made on the Respondent's proposed findings of fact (the Petitioner not having filed any): 1.-27. Accepted and incorporated. Cumulative. Accepted; subordinate to facts found. 30.-33. Accepted but subordinate and unnecessary. 34.-38. Accepted and incorporated. 39. Cumulative. 40.-41. Accepted and incorporated. 42. Accepted but subordinate to facts found and unnecessary. 43.-44. Accepted but subordinate and unnecessary. Conclusion of law. Accepted but unnecessary. 47.-48. Accepted but subordinate and unnecessary. 49. Cumulative and unnecessary. COPIES FURNISHED: Steve Belin The Circle K Corporation Regional Environmental Director 500 South Faulkenburg Road Tampa, FL 33619 Janet E. Bowman, Esquire Assistant General Counsel Department of Environmental Regulation 2600 Blair Stone Road Tallahassee, FL 32399-2400 Dale H. Twachtmann, Secretary Department of Environmental Regulation 2600 Blair Stone Road Tallahassee, FL 32399-2400 Daniel H. Thompson General Counsel Department of Environmental Regulation 2600 Blair Stone Road Tallahassee, FL 32399-2400
